DEF 14A 1 d534617ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

(Amendment No.      )

 

Filed by the Registrant ☒                            Filed by a Party other than the Registrant ☐

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

 

 

Murphy Oil Corporation

(Name of Registrant as Specified In Its Charter)

 

 

 

  

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

 

  (1) Title of each class of securities to which transaction applies:

 

 

  

 

  (2) Aggregate number of securities to which transaction applies:

 

 

  

 

  (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

  

 

  (4) Proposed maximum aggregate value of the transaction:

 

 

  

 

  (5) Total fee paid:

 

 

  

 

 

Fee paid previously with preliminary materials.

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

  (1) Amount Previously Paid:

 

 

  

 

  (2) Form, Schedule or Registration Statement No.:

 

 

  

 

  (3) Filing Party:

 

 

  

 

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LOGO

 

NOTICE OF
2018
ANNUAL MEETING OF STOCKHOLDERS & PROXY STATEMENT
YOUR VOTE IS IMPORTANT
Please vote online, by mobile device, by telephone, or, if you receive your materials by mail, you can sign and return your proxy card.


Table of Contents

LOGO

 

 

 

NOTICE OF ANNUAL MEETING

 

Date:    May 9, 2018
Time:    10:00 a.m. CDT
Place:    South Arkansas Arts Center
   110 East 5th Street
   El Dorado, Arkansas     71730

AGENDA:

 

1. Election of Directors;

 

2. Advisory vote to approve executive compensation;

 

3. Approval of the proposed 2018 Stock Plan for Non-Employee Directors as described in the Proxy Statement;

 

4. Approval of the proposed 2018 Long-Term Incentive Plan as described in the Proxy Statement;

 

5. Approval of the action of the Audit Committee of the Board of Directors in appointing KPMG LLP as the Company’s independent registered public accounting firm for 2018; and

 

6. Such other business as may properly come before the meeting.

Only stockholders of record at the close of business on March 12, 2018, the record date fixed by the Board of Directors of the Company, will be entitled to notice of and to vote at the meeting or any postponement or adjournment thereof. A list of all stockholders entitled to vote is on file at the office of the Company, 300 Peach Street, El Dorado, Arkansas 71730.

Your vote is very important to us and to our business. Prior to the meeting, you may submit your vote and proxy by telephone, mobile device, the internet, or, if you received your materials by mail, you can sign and return your proxy card. Instructions on how to vote begin on page 1.

 

LOGO

E. Ted Botner

Vice President, Law and Corporate Secretary

El Dorado, Arkansas

March 23, 2018


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Proxy Statement    LOGO       

 

 

Table of Contents

 

PROXY SUMMARY

 

   

 

1

 

 

 

 

Q&A—Questions and Answers About the Annual Meeting

 

 

 

 

2

 

 

 

Voting Procedures

 

 

 

 

3

 

 

 

Voting Securities

 

 

 

 

3

 

 

PROPOSAL 1—ELECTION OF DIRECTORS

 

   

 

4

 

 

 

 

Director Nominees

 

 

 

 

5

 

 

 

Board Leadership Structure

 

 

 

 

10

 

 

 

Risk Management

 

 

 

 

10

 

 

 

Committees

 

 

 

 

10

 

 

COMPENSATION OF DIRECTORS

 

   

 

13

 

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

 

   

 

15

 

 

 

SECURITY OWNERSHIP OF MANAGEMENT

 

   

 

16

 

 

 

PROPOSAL 2—ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

 

   

 

18

 

 

 

PROPOSAL 3—APPROVAL OF THE PROPOSED 2018 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS

 

   

 

19

 

 

 

PROPOSAL 4—APPROVAL OF THE PROPOSED 2018 LONG-TERM INCENTIVE PLAN

 

   

 

23

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

   

 

28

 

 

 

 

Background

 

 

 

 

28

 

 

 

Executive Summary

 

 

 

 

28

 

 

 

Introduction

 

 

 

 

34

 

 

 

Guiding Principles

 

 

 

 

35

 

 

 

Elements of Compensation

 

 

 

 

36

 

 

 

Executive Compensation Committee Report

 

 

 

 

43

 

 

EXECUTIVE COMPENSATION

 

   

 

44

 

 

 

 

Tabular Information for Named Executive Officers

 

 

 

 

44

 

 

AUDIT COMMITTEE REPORT

 

   

 

53

 

 

 

PROPOSAL 5—APPROVAL OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

   

 

54

 

 

 

GENERAL INFORMATION ABOUT THE ANNUAL MEETING

 

   

 

55

 

 

 

 

 

The solicitation of the enclosed proxy is made on behalf of the Board of Directors of Murphy Oil Corporation (the “Board”) for use at the Annual Meeting of Stockholders to be held on May 9, 2018. It is expected that this Proxy Statement and related materials will first be provided to stockholders on or about March 23, 2018. The complete mailing address of the Company’s principal executive office is 300 Peach Street, P.O. Box 7000, El Dorado, Arkansas 71731-7000. References in this Proxy Statement to “we,” “us,” “our,” “the Company”, “Murphy Oil” and “Murphy” refer to Murphy Oil Corporation and its consolidated subsidiaries.

 


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Proxy Summary

 

 

 

LOGO

 

 

 

Proposals to be Voted On

The following proposals will be voted on at the Annual Meeting of Stockholders.

 

          

 

For More
Information

 

  

 

Board
Recommendation  

 

 

Proposal 1—Election of Directors

  

 

Page 4

  

LOGO

 

Claiborne P. Deming    James V. Kelley      
T. Jay Collins    Walentin Mirosh      
Steven A. Cossé    R. Madison Murphy      
Lawrence R. Dickerson    Jeffrey W. Nolan      
Roger W. Jenkins    Neal E. Schmale      

Elisabeth W. Keller

 

  

Laura A. Sugg

 

         

 

Proposal 2

     

 

Page 18

  

 

 

LOGO

 

Advisory Vote to Approve Executive Compensation

 

       

 

Proposal 3

     

 

Page 19

  

 

LOGO

 

 

Approval of the Proposed 2018 Stock Plan for Non-Employee Directors

 

       

 

Proposal 4

     

 

Page 23

  

 

LOGO

 

 

Approval of the Proposed 2018 Long-Term Incentive Plan

 

       

 

Proposal 5

     

 

Page 54

  

 

LOGO

 

 

Approval of Appointment of Independent Registered Public Accounting Firm

       

 

You may cast your vote in the following ways:

 

LOGO

The 2018 Murphy Oil Corporation Annual Meeting will begin at 10:00 a.m. CDT on May 9, 2018,

at the South Arkansas Arts Center located at 110 East 5th Street in El Dorado, Arkansas 71730.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 9, 2018:

We have elected to take advantage of the U.S. Securities and Exchange Commission (the “SEC”) rules that allow us to furnish proxy materials to the Company’s stockholders via the internet. These rules allow us to provide information that the Company’s stockholders need while lowering the costs and accelerating the speed of delivery and reducing the environmental impact of the Annual Meeting. This Proxy Statement, along with the Company’s Annual Report to Stockholders, which includes the Company’s Form 10-K report for the year ended December 31, 2017, are available via the internet at http://ir.murphyoilcorp.com/phoenix.zhtml?c=61237&p=proxy.

 

 

 

Murphy Oil Corporation   |     1       


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LOGO

 

  

 

Q&A—Questions and Answers about the Annual   

            Meeting

 

 

When and where is the Annual Meeting?

The Company’s 61st Annual Meeting will be held at 10:00 a.m. CDT on Wednesday, May 9, 2018, at the South Arkansas Arts Center, located at 110 East 5th Street, in El Dorado, Arkansas 71730.

May I attend the meeting?

Attendance at the meeting is open to stockholders of record as of March 12, 2018, Company employees and certain guests. If you are a stockholder, regardless of the number of shares you hold, you may attend the meeting.

Who may vote?

You may vote if you were a holder of record of Murphy Oil Corporation common stock as of the close of business on March 12, 2018. Each share of common stock is entitled to one vote at the Annual Meeting. You may vote in person at the meeting, or by proxy via the methods explained on page 1 of this document.

Why should I vote?

Your vote is very important regardless of the amount of stock you hold. The Board strongly encourages you to exercise your right to vote as a stockholder of the Company.

Why did I receive a Notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials?

We are providing access to our proxy materials via the internet. As a result, we have sent a Notice of Internet Availability instead of a paper copy of the proxy materials to most of our stockholders. The Notice contains instructions on how to access the proxy materials via the internet and how to request a paper copy. In addition, the website provided in the Notice allows stockholders to request future proxy materials in printed form by mail or electronically by email. A stockholder’s election to receive proxy materials by mail or email will remain in effect until the stockholder terminates it.

Why didn’t I receive a Notice in the mail regarding the internet availability of proxy materials?

We are providing certain stockholders, including those who have previously requested paper copies of the proxy materials, with paper copies of the proxy materials instead of a Notice. If you would like to reduce the costs incurred by Murphy in mailing proxy materials and conserve natural resources, you can consent to receive all future proxy statements, proxy cards and annual reports electronically via email. To sign up for electronic delivery, please follow the instructions provided with your proxy materials and on your proxy card or voting instruction card. When prompted, indicate that you agree to receive or access stockholder communications electronically in the future.

May I vote my stock by filling out and returning the Notice?

No. Instructions on how to access the proxy materials and vote are in the email sent to you and on the Notice.

How can I access the proxy materials through the internet?

Your Notice or proxy card will contain instructions on how to view our proxy materials for the Annual Meeting via the internet. The Proxy Statement and Annual Report are also available at http://ir.murphyoilcorp.com/phoenix.zhtml?c=61237&p=proxy.

 

 

 

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Proxy Statement

 

 

 

LOGO

 

 

 

    VOTING PROCEDURES

 

 

The affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting is required for approval of matters presented at the meeting. Your proxy will be voted at the meeting unless you (i) revoke it at any time before the vote by filing a revocation with the Corporate Secretary of the Company, (ii) duly execute a proxy card bearing a later date or (iii) appear at the meeting and vote in person. If you voted via the Internet, mobile device or telephone, you can change your vote with a timely and valid later vote or by voting by ballot at the meeting. Proxies returned to the Company, votes cast other than in person and written revocations will be disqualified if received after commencement of the meeting. If you elect to vote your proxy card or as directed on the Notice or vote by telephone, mobile device or internet as described in the telephone/mobile device/internet voting instructions on your proxy card or Notice, the Company will vote your shares as you direct. Your telephone/mobile device/internet vote authorizes the named proxies to vote your shares in the same manner as if you had marked, signed and returned your proxy card.

Votes cast by proxy or in person at the meeting will be counted by the persons appointed by the Company to act as Judges of Election for the meeting. The Judges of Election will treat shares represented by proxies that reflect abstentions as shares that are present and entitled to vote for purposes of determining the presence of a quorum. Abstentions do not constitute a vote “against” any matter. However, in accordance with NYSE rules, abstentions will have the effect of a vote counted “against” for our plans.

The Judges of Election will treat shares referred to as “broker non-votes” (i.e., shares held by brokers or nominees as to which instructions have not been received from the beneficial owners or persons entitled to vote and that the broker or nominee does not have discretionary power to vote on as a non-routine matter) as shares that are present and entitled to vote on routine matters and for purposes of determining the presence of a quorum. The proposal to approve the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the current fiscal year should be considered a routine matter. However, for purposes of determining the outcome of any non-routine matter as to which the broker does not have discretionary authority to vote, those shares will be treated as not present and not entitled to vote with respect to that matter (even though those shares are considered entitled to vote for quorum purposes and may be entitled to vote on other matters). Accordingly, broker non-votes will be disregarded in the calculation of “votes cast” and will have no effect on the vote. Notably, the election of directors, the advisory vote to approve executive compensation, the approval of the proposed 2018 Stock Plan for Non-Employee Directors and the approval of the proposed 2018 Long-Term Incentive Plan should be considered non-routine matters.

Unless specification to the contrary is made, the shares represented by the enclosed proxy will be voted FOR all the nominees for director, FOR the approval of the compensation of the Company’s Named Executive Officers, FOR the approval of the proposed 2018 Stock Plan for Non-Employee Directors, FOR the approval of the proposed 2018 Long-Term Incentive Plan and FOR the approval of the action of the Audit Committee of the Board of Directors in appointing KPMG LLP as the Company’s independent registered public accounting firm for 2018.

The expenses of printing and distributing proxy material, including expenses involved in forwarding materials to beneficial owners of stock, will be paid by the Company. The Company’s officers or employees, without additional compensation, may solicit the return of proxies from certain stockholders by telephone or other means.

 

 

    VOTING SECURITIES

 

 

On March 12, 2018, the record date for the meeting, the Company had 173,036,510 shares of Common Stock outstanding, all of one class and each share having one vote with respect to all matters to be voted on at the meeting. This amount does not include 22,027,336 shares of treasury stock. Information as to Common Stock ownership of certain beneficial owners and management is set forth in the tables on pages 15 and 16 (“Security Ownership of Certain Beneficial Owners” and “Security Ownership of Management”).

 

 

 

Murphy Oil Corporation   |     3       


Table of Contents

 

LOGO

 

  

Proposal 1—Election of Directors

 

 

 

The Board recognizes that it is important for the Company’s directors to possess a diverse array of backgrounds and skills, whether in terms of executive management leadership or educational achievement. When considering new candidates, the Nominating & Governance Committee, with input from the Board, takes into account these factors as well as other appropriate characteristics, such as sound judgment, honesty, and integrity. In addition, the Nominating & Governance Committee, when searching for nominees for directors, relies on the Company’s Corporate Governance Guidelines, which state, “The Company endeavors to have a board representing diverse experience at policy-making levels in business areas that are relevant to the Company’s global activities.” The goal is to assemble and maintain a Board comprised of individuals that not only bring to bear a wealth of business and/or technical expertise, but that also demonstrate a commitment to ethics in carrying out the Board’s responsibilities with respect to oversight of the Company’s operations.

To the extent authorized by the proxies, the shares represented by the proxies will be voted in favor of the election of the twelve nominees for director whose names are set forth herein. The Company’s Corporate Governance Guidelines provide that an incumbent director who fails to receive the required vote for re-election shall tender a resignation to the

board. If for any reason any of these nominees is not a candidate when the election occurs, the shares represented by such proxies will be voted for the election of the other nominees named and may be voted for any substituted nominees or the Board may reduce its size. However, management of the Company does not expect this to occur. All nominees were elected at the last Annual Meeting of Stockholders.

All directors other than Mr. Roger Jenkins have been deemed independent by the Board based on the rules of the New York Stock Exchange (“NYSE”) and the standards of independence included in the Company’s Corporate Governance Guidelines. As part of its independence recommendation to the Board, the Nominating & Governance Committee at its February meeting considered familial relationships (Mr. Deming, Mr. Murphy and Ms. Keller are first cousins).

Mr. Deming, the independent Chairman of the Board, serves as presiding director at regularly scheduled board meetings as well as at no less than three meetings solely for non-employee directors. The meetings for non-employee directors are held in conjunction with the regularly scheduled February, August and December board meetings, at least one of which includes only independent non-employee directors.

 

 

 

 

     4  |     Murphy Oil Corporation


Table of Contents

Proposal 1—Election of Directors (continued)  

 

 

 

LOGO

 

 

The Corporate Governance Guidelines provide that stockholders and other interested parties may send communications to the Board, specified individual directors and the independent directors as a group c/o the Corporate Secretary, Murphy Oil Corporation, P.O. Box 7000, El Dorado, Arkansas 71731-7000. All such communications will be kept confidential unless otherwise required by law and relayed to the specified director(s). The names of the Director nominees and certain information as to them, are as follows:

DIRECTOR NOMINEES

 

 
     LOGO

 

 

T. JAY COLLINS

Houston, Texas

 

Age: 71

 

Director Since: 2013

  

Board Committees

 

   Executive Compensation

 

   Nominating & Governance

 

  

Certain other directorships

 

   Oceaneering
International, Inc.
Houston, Texas

 

 
    

Principal occupation or employment

 

   President and Chief Executive Officer, Retired, Oceaneering International, Inc., since May 2011; President and Chief Executive Officer, Oceaneering International, Inc., from May 2006 to May 2011

 

 

Mr. Collins has extensive knowledge of international management and corporate development. As a prior President and Chief Executive Officer of Oceaneering International, Inc., he has substantial knowledge and experience in the oil and gas industry. Among other qualifications, Mr. Collins brings to the Board experience in field operations, executive management and finance.

 

 

 
     LOGO

 

 

STEVEN A. COSSÉ

El Dorado, Arkansas

 

Age: 70

 

Director Since: 2011

  

Board Committees

 

   Executive

 

   Health, Safety &
Environmental

 

 

  

Certain other directorships

 

   Simmons First National
Corporation
Pine Bluff,  Arkansas

   
    

Principal occupation or employment

 

   President and Chief Executive Officer of the Company from June 2012 to August 2013, retired from the Company December 2013; previously Executive Vice President and General Counsel of the Company from February 2005 through February 2011, retired from the Company February 2011 to May 2012

 

 

Mr. Cossé’s long service in several capacities with the Company has helped him gain a proficient understanding of many areas, including environmental laws and regulations. Among other qualifications, Mr. Cossé brings to the Board expertise in corporate governance, banking and securities laws and executive leadership.

 

 

 
     LOGO

 

 

CLAIBORNE P. DEMING

El Dorado, Arkansas

 

Age: 63

 

Director Since: 1993

  

Board Committees

 

   Chairman of the Board

 

   Chair, Executive

 

   Health, Safety &
Environmental

 

  

Certain other directorships

 

   Murphy USA Inc.
El Dorado, Arkansas

 

   
    

Principal occupation or employment

 

   President and Chief Executive Officer of the Company from October 1994 through December 2008, retired from the Company June 2009

 

 

Mr. Deming’s experience as former President and Chief Executive Officer of Murphy Oil Corporation gives him insight into the Company’s challenges, opportunities and operations. Among other qualifications, Mr. Deming brings to the Board executive leadership skills and over 30 years’ experience in the oil and gas industry.

 

 

 

 

Murphy Oil Corporation   |     5       


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LOGO

 

  

Proposal 1—Election of Directors (continued)  

 

 

 

 
     LOGO

 

 

LAWRENCE R. DICKERSON

Houston, Texas

 

Age: 65

 

Director Since: 2014

  

Board Committees

 

   Audit

   Nominating & Governance

 

 

  

Certain other directorships

 

   Oil States International,
Inc.
Houston, Texas

   Great Lakes Dredge &
Dock Company
Chairman
Oak Brook, Illinois

   Hercules Offshore, Inc.
Chairman
Houston, Texas
Until 2016

  
    

 

Principal occupation or employment

 

   President and Chief Executive Officer, Retired, Diamond Offshore Drilling, Inc., an offshore drilling company, since March 2014; President and Chief Executive Officer, Diamond Offshore Drilling, Inc., from May 2008 through March 2014

 

  

Mr. Dickerson’s experience as the President and a director of Diamond Offshore Drilling, Inc. from March 1998 and as Chief Executive Officer from May 2008 until his retirement in March 2014 brings to the Board broad experience in leadership and financial matters. Among other qualifications, he brings to the Board expertise as a Certified Public Accountant and in international drilling operations.

 

 

 
     LOGO

 

 

ROGER W. JENKINS

El Dorado, Arkansas

 

Age: 56

 

Director Since: 2013

  

Board Committees

 

   Executive

 

  

Certain other directorships

 

   None

 

 
    

Principal occupation or employment

 

   President and Chief Executive Officer of the Company since August 2013 and President of Murphy Exploration & Production Company since June 2012; previously Chief Operating Officer & Executive Vice President, Exploration & Production of the Company from June 2012 to August 2013; Executive Vice President, Exploration & Production of the Company and President of Murphy Exploration & Production Company from August 2009 to June 2012

 

 

 

Mr. Jenkins’ leadership as President and Chief Executive Officer of Murphy Oil Corporation allows him to provide the Board with his detailed perspective of the Company’s global operations. With a Bachelor’s degree in Petroleum Engineering, a Master’s degree in Business Administration and over 30 years of industry experience, he has played a critical leadership role in Murphy’s worldwide exploration and production operations, including the development of the Kikeh field in Malaysia and the Eagle Ford Shale in South Texas.

 

 

 
     LOGO

 

 

ELISABETH W. KELLER

Cambridge, Massachusetts

 

Age: 60

 

Director Since: 2016

  

Board Committees

 

   Health, Safety &
Environmental

 

  

Certain other directorships

 

   None

   
    

Principal occupation or employment

 

   President, Inglewood Plantation, LLC, since 2014; CEO, Keller Enterprises, LLC, from 2008 to 2014

 

 

 

 

Ms. Keller is the President of Inglewood Plantation, LLC and is responsible for the development of strategic vision and oversight of operations of the largest organic farm in Louisiana. She brings to the Board extensive knowledge in health and environmental issues, both domestically and internationally.

 

 

 

 

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Table of Contents

Proposal 1—Election of Directors (continued)  

 

 

 

LOGO

 

 

 

 
     LOGO

 

 

JAMES V. KELLEY

Little Rock, Arkansas

 

Age: 68

 

Director Since: 2006

  

Board Committees

 

   Executive

 

   Chair, Nominating &
Governance

 

  

Certain other directorships

 

   BancorpSouth, Inc.
Tupelo, Mississippi
Until 2014

 

   
    

Principal occupation or employment

 

   President and Chief Operating Officer, Retired, BancorpSouth, Inc. (a NYSE bank holding company) since August 2014; President and Chief Operating Officer, BancorpSouth, Inc. from 2001 to August 2014

 

 

 

Mr. Kelley has extensive knowledge of capital markets and accounting issues. As former President and Chief Operating Officer of BancorpSouth, Inc., he understands the fundamentals and responsibilities of operating a large company. Among other qualifications, Mr. Kelley brings to the Board experience in banking, finance and accounting, as well as executive management.

 

 

 
     LOGO

 

 

WALENTIN MIROSH

Calgary, Alberta

 

Age: 72

 

Director Since: 2011

  

Board Committees

 

   Executive Compensation

   Chair, Health, Safety &
Environmental

 

 

  

Certain other directorships

 

   TC PipeLines GP, Inc.
Calgary, Alberta

 

 

 
    

Principal occupation or employment

 

   President, Mircan Resources Ltd., a private consulting company since January 2010

 

 

Mr. Mirosh, with his accomplishments in the chemical, natural gas, and investment industries, is able to provide the Board with dependable and insightful input in many areas. He brings to the Board experience in energy, regulatory and international law as well as skills in business development and corporate strategy.

 

 

 
     LOGO

 

 

R. MADISON MURPHY

El Dorado, Arkansas

 

Age: 60

 

Director Since: 1993
(Chairman, 1994-2002)

  

Board Committees

 

   Chair, Audit

   Executive

 

 

  

Certain other directorships

 

   Deltic Timber Corporation
El Dorado, Arkansas
Until February 2018

   Murphy USA Inc.
Chairman
El Dorado, Arkansas

 

 

 
    

Principal occupation or employment

 

   Managing Member, Murphy Family Management, LLC, which manages investments, farm, timber and real estate, since 1998;

   President, The Murphy Foundation;

   Owner, The Sumac Company, LLC, which manages investments, timber and vineyard operations; and

   Owner, Presqu’ile Winery

 

 

Mr. Murphy served as Chairman of the Board of Murphy Oil Corporation from 1994 to 2002. This background, along with his previous membership on the Board of Directors of Deltic Timber Corporation and current membership on the Board of Directors of Murphy USA Inc., brings to the Board and to the Audit Committee a unique business and financial perspective.

 

 

 

 

Murphy Oil Corporation   |     7       


Table of Contents

 

LOGO

 

  

Proposal 1—Election of Directors (continued)

 

 

 

 
     LOGO

 

 

JEFFREY W. NOLAN

Little Rock, Arkansas

 

Age: 49

 

Director Since: 2012

  

Board Committees

 

   Executive

 

   Executive Compensation

 

   Nominating & Governance

 

 

  

Certain other directorships

 

   None

 

 

 
    

Principal occupation or employment

 

   President & Chief Executive Officer, Loutre Land and Timber Company, a natural resources company with a focus on the acquisition, ownership and management of timberland and mineral properties, since 1998

   Chairman of the Board of Directors, First Financial Bank, headquartered in EI Dorado, Arkansas, since 2015

 

 

 

Mr. Nolan’s experience as President and Chief Executive Officer of a natural resources company, in addition to his former legal practice focused on business and corporate transactions, allows him to bring to the Board expertise in legal matters, corporate governance, corporate finance, acquisitions and divestitures and the management of mineral properties.

 

 

 
     LOGO

 

 

NEAL E. SCHMALE

La Jolla, California

 

Age: 71

 

Director Since: 2004

  

Board Committees

 

   Audit

 

   Chair, Executive
Compensation

 

 

 

  

Certain other directorships

 

   WD-40 Company
San Diego, California

 

 

 
    

Principal occupation or employment

 

   President and Chief Operating Officer, Retired, Sempra Energy, an energy services holding company, since October 2011; President and Chief Operating Officer, Sempra Energy, from February 2006 to October 2011

 

 

Mr. Schmale, as former Chief Operating Officer of Sempra Energy, brings to the Board the perspective of a corporate leader having faced external economic, social and governance issues. He also brings specific experience in financial matters from his prior service as Chief Financial Officer of Sempra Energy. He holds degrees in petroleum engineering and law, and has a vast knowledge in different fields concerning the oil industry.

 

 

 
     LOGO

 

 

LAURA A. SUGG

Montgomery, Texas

 

Age: 57

 

Director Since: 2015

  

Board Committees

 

   Audit

 

   Health, Safety &
Environmental

 

 

  

Certain other directorships

 

   Denbury Resources
Plano, Texas

 

   Williams Companies Inc.
Tulsa, Oklahoma
Until 2016

 

 

 
    

Principal occupation or employment

 

   Senior Executive, Retired, ConocoPhillips, then an international, integrated oil company, since 2010

 

 

Ms. Sugg’s broad background in capital allocation and accomplishments in the energy industry allow her to bring to the Board expertise in industry, operational and technical matters. Among other qualifications, she brings to the Board specific experience in executive leadership, human resources, compensation and financial matters. As a former leader at ConocoPhillips, Ms. Sugg has a proficient understanding of an oil company’s challenges and opportunities.

 

 

 

 

     8  |     Murphy Oil Corporation


Table of Contents

Proposal 1—Election of Directors (continued)

 

 

 

LOGO

 

 

Board of Directors Skills and Expertise Matrix

The matrix below represents the diverse set of skills and expertise represented on the Company’s Board:

 

 

  Skills and Expertise

 

  

 

Deming

 

  

 

Collins

 

  

 

Cossé

 

  

 

Dickerson

 

  

 

Keller

 

  

 

Kelley

 

  

 

Mirosh

 

  

 

Murphy

 

  

 

Nolan

 

  

 

Schmale

 

  

 

Sugg

 

  

 

Jenkins  

 

 

Former CEO

                                                                                                     

 

Senior Management

                                                                       

 

Accounting/Audit

                                                                                               

 

Finance/Banking

                                                                                                     

 

Corporate Governance

                                                                             

 

Law

                                                                                                     

 

Government Relations/Public Policy

                                                                                                     

 

Industry

                                                                       

 

Operations

                                                                                         

 

Environment, Health & Safety

                                                                             

 

Business Development and Corporate Strategy

                                                                 

 

Human Resources/Compensation

                                                                             

 

Board of Directors

                                                           

 

Risk Management

                                                                                               

 

International Business

                                                                                   

 

 

 

LOGO

 

 

 

Murphy Oil Corporation   |     9       


Table of Contents

 

LOGO

 

  

Proposal 1—Election of Directors (continued)

 

 

 

BOARD LEADERSHIP STRUCTURE

The positions of Chairman of the Board and the Chief Executive Officer of the Company are held by two individuals. Mr. Deming serves as the Chairman of the Board as a non-executive and independent director. Mr. Jenkins is the Company’s President and Chief Executive Officer. Along with the Chairman of the Board of Directors and the Chief Executive Officer, other directors bring different perspectives and roles to the Company’s management, oversight and strategic development. The Company’s directors bring experience and expertise from both inside and outside the company and industry, while the Chief Executive Officer is most familiar with the Company’s business and industry, and most capable of leading the execution of the Company’s strategy. The Board believes that separating the roles of Chairman and Chief Executive Officer is currently in the best interest of stockholders because it provides the appropriate balance between strategy development and independent oversight of management. The Board will, however, maintain its flexibility to make this determination at any given point in time to provide appropriate leadership for the Company.

RISK MANAGEMENT

The Board exercises risk management oversight and control both directly and indirectly, the latter through various Board Committees. The Board regularly reviews information regarding the Company’s credit, liquidity and operations, including the risks associated with each. The Executive Compensation Committee is responsible for overseeing the management of risks relating to the Company’s executive compensation plans and arrangements. The Audit Committee is responsible for oversight of financial risks and the ethical conduct of the Company’s business, including the steps the Company has taken to monitor and mitigate these risks. The Nominating & Governance Committee, in its role of reviewing and maintaining the Company’s corporate governance guidelines, manages risks associated with the independence of the Board and potential conflicts of interest. The Health, Safety & Environmental Committee oversees management of risks associated with environmental, health and safety issues. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports and by management about the known risks to the strategy and the business of the Company.

COMMITTEES

The standing committees of the Board are the Executive Committee, the Audit Committee, the Executive Compensation Committee, the Nominating & Governance Committee and the Health, Safety & Environmental Committee.

The Executive Committee, in accordance with the Company’s by-laws, is vested with the authority to exercise certain functions of the Board when the Board is not in session. The Executive Committee is also in charge of all financial accounting, legal and general administrative affairs of the Company, subject to any limitations prescribed by the by-laws or by the Board.

The Audit Committee has the sole authority to appoint or replace the Company’s independent registered public accounting firm, which reports directly to the Audit Committee. The Audit Committee also assists the Board with its oversight of the integrity of the Company’s financial statements, the independent registered public accounting firm’s qualifications, independence and performance, the performance of the Company’s internal audit function, the compliance by the Company with legal and regulatory requirements, and the review of programs related to compliance with the Company’s Code of Business Conduct and Ethics. The Audit Committee meets with representatives of the independent registered public accounting firm and with members of the internal audit function for these purposes. The Board has designated Neal E. Schmale as its “Audit Committee Financial Expert” as defined in Item 407 of Regulation S-K. All of the members of the Audit Committee including Mr. Schmale are independent under the rules of the NYSE and the Company’s independence standards.

The Executive Compensation Committee oversees the compensation of the Company’s executives and directors and administers the Company’s annual incentive compensation plan, the long-term incentive plan and the stock plan for non-employee directors. All of the members of the Executive Compensation Committee are independent under the rules of the NYSE and the Company’s independence standards. The Compensation Discussion and Analysis section contains additional information about the Executive Compensation Committee. In carrying out its duties, the Executive Compensation Committee will have direct access to outside advisors, independent compensation consultants and others to assist them.

The Nominating & Governance Committee identifies and recommends potential Board members, recommends appointments to Board committees, oversees evaluation of the Board’s performance and reviews and assesses the Corporate Governance Guidelines of the Company. All of the members of the Nominating & Governance Committee are independent under the rules of the NYSE and the Company’s independence standards. Information regarding the process for evaluating and selecting potential director candidates, including those recommended by stockholders, is set out in the Company’s Corporate Governance Guidelines.

 

 

 

 

     10  |     Murphy Oil Corporation


Table of Contents

Proposal 1—Election of Directors (continued)

 

 

 

LOGO

 

 

Stockholders desiring to recommend candidates for membership on the Board for consideration by the Nominating & Governance Committee should address their recommendations to: Nominating & Governance Committee of the Board of Directors, c/o Corporate Secretary, Murphy Oil Corporation, P.O. Box 7000, El Dorado, Arkansas 71731-7000. As a matter of policy, candidates recommended by stockholders are evaluated on the same basis as candidates recommended by Board members, executive search firms or other sources.

The Health, Safety & Environmental Committee assists the Board and management in monitoring compliance with applicable environmental, health and safety laws, rules and regulations as well as the Company’s Worldwide Health, Safety & Environmental Policy. Review of policies, procedures and practices regarding security of the Company’s people and property is also within the purview of this committee. The Committee assists the Board on matters relating to the Company’s response to evolving public issues affecting the Company in the realm of health, safety and the environment. The Committee has benefitted from the Company’s involvement with groups such as the American Petroleum Institute (API) and sponsorship of initiatives like the Massachusetts Institute of Technology’s Joint Program on the Science and Policy of Global Change, which keeps abreast of emerging issues with respect to climate change.

Charters for the Audit, Executive Compensation, Nominating & Governance and Health, Safety & Environmental Committees, along with the Corporate Governance Guidelines, Code of Business Conduct and Ethics and the Code of Ethical Conduct for Executive Management, are available on the Company’s website, http://ir.murphyoilcorp.com/phoenix.zhtml?c=61237&p=irol-govHighlights.

BOARD AND COMMITTEE EVALUATIONS

The Board and each committee conducts an annual self-evaluation. Each November, the directors are requested to provide their assessments of the effectiveness of the Board and the committees on which they serve. The individual assessments are organized and summarized by the Corporate Secretary and provided to each Chairman for discussion with the Board and the committees.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 2017, none of the members of the Executive Compensation Committee (i) was an officer or employee of the Company, (ii) was a former officer of the Company or (iii) had any relationship requiring disclosure by the Company under any paragraph of Item 404 of Regulation S-K.

 

 

 

Murphy Oil Corporation   |     11       


Table of Contents

 

LOGO

 

  

Proposal 1—Election of Directors (continued)

 

 

MEETINGS AND ATTENDANCE

During 2017, there were six meetings of the Board, eleven meetings of the Executive Committee, six meetings of the Audit Committee, three meetings of the Executive Compensation Committee, three meetings of the Nominating & Governance Committee and two meetings of the Health, Safety & Environmental Committee. All nominees’ attendance exceeded 75% of the total number of meetings of the Board and committees on which they served. Attendance for Board and committee meetings averaged 99% for the full year. All the Board members attended the 2017 Annual Meeting of Stockholders. As set forth in the Company’s Corporate Governance Guidelines, all Board members are expected to attend each Annual Meeting of Stockholders.

 

LOGO

 

 

 

     12  |     Murphy Oil Corporation


Table of Contents

Compensation of Directors

 

 

 

LOGO

 

 

 

The Company’s standard arrangement for the compensation of non-employee directors divides remuneration into cash and equity components. This approach aligns the interests of directors and the stockholders they represent. The Company further targets total director compensation at a level near the 50th percentile of the competitive market (as determined by the Executive Compensation Committee’s (the “Committee”) independent compensation consultant, Pay Governance LLC (“Pay Governance”)), enhancing the Company’s ability to retain and recruit qualified individuals. Directors can elect to defer their cash compensation into the Company’s Non-Qualified Deferred Compensation Plan for Non-Employee Directors (“NED DCP Plan”) which was approved by the Board of Directors on February 1, 2017. Deferred amounts are deemed to be notionally invested in the Company’s Stock Fund. The column below showing “Fees Earned or Paid in Cash” includes any amounts that were voluntarily deferred to the NED DCP Plan. Mr. Mirosh (Canadian citizen) does not have the opportunity to defer cash compensation in this manner.

In 2017, the cash component consisted of an annual retainer of $60,000, plus $2,000 for each Board or committee meeting attended. Supplemental retainers were paid to the Chairman of the Board ($115,000), Audit Committee Chairman ($15,000), the Audit Committee Financial Expert ($10,000), other members of the Audit Committee ($7,500),

the Executive Compensation Committee Chairman ($15,000) and the Chair of each other committee ($10,000). The Company also reimburses directors for reasonable travel, lodging and related expenses they incur in attending Board and committee meetings.

In 2017, the total equity compensation for non-employee directors was increased to $200,000 to bring the total director compensation to a level near the 50th percentile of the Company’s peer group (as determined by the Pay Governance) enhancing the Company’s ability to retain and recruit qualified individuals. Each non-employee director received 6,935 time-based restricted stock units on February 1, 2017, which cliff vest after three years.

The non-employee directors are eligible to participate in the matching gift program on the same terms as Murphy employees. Under this program, an eligible person’s total gifts of up to $12,500 per calendar year will qualify. The Company will contribute to qualified educational institutions and hospitals an amount equal to twice the amount (2 to 1) contributed by the eligible person. The Company will contribute to qualified welfare and cultural organizations an amount equal to (1 to 1) the contribution made by the eligible person. Those amounts are in the column below showing “All Other Compensation”.

 

 

2017 DIRECTOR COMPENSATION TABLE

 

   Name

 

  

Fees Earned or
Paid in Cash

($)

 

    

Stock
Awards
($)
(1)(2)

 

    

Option
Awards
($)

 

    

Non-Equity
Incentive Plan
Compensation
($)

 

    

 

Change in
Pension Value
and

Nonqualified
Deferred
Compensation
Earnings ($)
(3)

 

    

All Other
Compensation
($)

 

    

Total

($)

 

 

 

Claiborne P. Deming

     219,017        200,006                                    419,023  

 

T. Jay Collins

     84,017        200,006                                    284,023  

 

Steven A. Cossé

     98,017        200,006                             24,500        322,523  

 

Lawrence R. Dickerson

     97,508        200,006                             5,000        302,514  

 

Elisabeth W. Keller

     74,000        200,006                             6,030        280,036  

 

James V. Kelley

     110,017        200,006                                    310,023  

 

Walentin Mirosh

     88,267        200,006                                    288,273  

 

R. Madison Murphy

     128,517        200,006                      12,043        25,000        365,566  

 

Jeffrey W. Nolan

     98,017        200,006                             6,210        304,233  

 

Neal E. Schmale

     122,517        200,006                             25,000        347,523  

 

Laura A. Sugg

     95,500        200,006                                    295,506  
(1) Represents grant date fair value of time-based restricted stock units awarded in 2017 as computed in accordance with FASB ASC Topic 718, excluding forfeiture estimates, as more fully described in Note J to the consolidated financial statements included in the Company’s 2017 Form 10-K Annual Report.

 

 

 

Murphy Oil Corporation   |     13       


Table of Contents

 

LOGO

 

  

Compensation of Directors (continued)

 

 

(2) At December 31, 2017, total time-based restricted stock units outstanding were:

 

     

Restricted  

Stock Units  

 

Claiborne P. Deming

 

  

 

18,792

 

 

T. Jay Collins

 

  

 

18,792

 

 

Steven A. Cossé

 

  

 

18,792

 

 

Lawrence R. Dickerson

 

  

 

18,792

 

 

Elisabeth W. Keller

 

  

 

7,311

 

 

James V. Kelley

 

  

 

18,792

 

 

Walentin Mirosh

 

  

 

18,792

 

 

R. Madison Murphy

 

  

 

18,792

 

 

Jeffrey W. Nolan

 

  

 

18,792

 

 

Neal E. Schmale

 

  

 

18,792

 

 

Laura A. Sugg

 

  

 

18,641

 

 

(3) The 1994 Retirement Plan for Non-Employee Directors was frozen on May 14, 2003. At that time, then current directors were vested based on their years of service, with no further benefits accruing and benefits being paid out according to the terms of the plan.

 

 

 

     14  |     Murphy Oil Corporation


Table of Contents

Security Ownership of Certain Beneficial Owners

 

 

 

LOGO

 

 

As of December 31, 2017, the following are known to the Company to be the beneficial owners of more than five percent of the Company’s Common Stock (as of the date of such stockholder’s Schedule 13G filing with the SEC):

 

  Name and address of beneficial owner

 

  

Amount and

nature of

beneficial

ownership(1)

 

   

Percentage

 

 

 

BlackRock Inc.

  

 

 

 

15,460,308

 

(2) 

 

 

 

 

   9.000%

 

 

55 East 52nd Street     

New York, NY 10055

 

                

 

The Vanguard Group

  

 

 

 

14,396,026

 

(3) 

 

 

 

 

8.340%

 

 

100 Vanguard Blvd.     

Malvern, PA 19355

 

                

 

Hotchkis and Wiley Capital Management, LLC

  

 

 

 

14,011,970

 

(4) 

 

 

 

 

8.120%

 

 

725 S. Figueroa Street 39th Fl     

Los Angeles, CA 90017

 

                

 

Capital World Investors

  

 

 

 

12,899,680

 

(5) 

 

 

 

 

7.400%

 

 

333 South Hope Street     

Los Angeles, CA 90071

 

                

 

FMR LLC

  

 

 

 

12,291,323

 

(6) 

 

 

 

 

7.122%

 

 

245 Summer Street     

Boston, Massachusetts 02210

 

                

 

T. Rowe Price Associates, Inc.

  

 

 

 

10,201,141

 

(7) 

 

 

 

 

5.900%

 

 

100 E. Pratt Street     

Baltimore, MD 21202

 

                

 

Pzena Investment Management, LLC

  

 

 

 

9,703,852

 

(8) 

 

 

 

 

5.600%

 

 

320 Park Avenue, 8th floor     

New York, NY 10022

 

                
(1) Includes Common Stock for which the indicated owner has sole or shared voting or investment power and is based on the indicated owner’s Schedule 13G filing for the period ended December 31, 2017.
(2) A parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G). Total includes 14,687,215 sole voting power shares, -0- shared voting power shares, 15,460,308 sole dispositive power shares and -0- shared dispositive power shares.
(3) An investment adviser in accordance with Rule 13d-1(b)(1)(ii)(E). Total includes 86,417 sole voting power shares, 19,800 shared voting power shares, 14,301,538 sole dispositive power shares and 94,488 shared dispositive power shares.
(4) An investment adviser in accordance with Rule 13d-1(b)(1)(ii)(E). Total includes 8,956,074 sole voting power shares, -0- shared voting power shares, 14,011,970 sole dispositive power shares and -0- shared dispositive power shares.
(5) An investment adviser in accordance with Rule 13d-1(b)(1)(ii)(E). Total includes 12,899,680 sole voting power shares, -0- shared voting power shares, 12,899,680 sole dispositive power shares and -0- shared dispositive power shares. Beneficial ownership disclaimed pursuant to Rule 13d-4.
(6) A parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G). Total includes 2,389,105 sole voting power shares, -0- shared voting power shares, 12,291,323 sole dispositive power shares and -0- shared dispositive power shares.
(7) These securities are owned by various individual and institutional investors which T. Rowe Price Associates, Inc. (“Price Associates”) serves as investment adviser with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities. Total includes 2,517,824 sole voting power shares, -0- shared voting power shares, 10,201,141 sole dispositive power shares and -0- shared dispositive power shares.
(8) An investment adviser in accordance with Rule 13d-1(b)(1)(ii)(E). Total includes 4,169,396 sole voting power shares, -0- shared voting power shares, 9,703,852 sole dispositive power shares and -0- shared dispositive power shares.

 

 

 

Murphy Oil Corporation   |     15       


Table of Contents

 

LOGO

 

  

Security Ownership of Management

 

 

The following table sets forth information, as of February 20, 2018, concerning the number of shares of Common Stock of the Company beneficially owned by all directors and nominees, each of the Named Executive Officers (as hereinafter defined), and directors and executive officers as a group.

 

  Name

 

  

Personal
with Full Voting
and Investment
Power
(1)(2)

 

    

Personal as
Beneficiary
of Trusts

 

    

Voting and
Investment
Power Only

 

   

Options
Exercisable
Within 60 Days

 

    

Total

 

   

Percent of
Outstanding
(if greater than
one percent)

 

 

 

Claiborne P. Deming

 

  

 

 

 

 

848,984

 

 

 

 

  

 

 

 

 

1,639,538

 

 

 

 

  

 

 

 

 

209,720

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

2,698,242

 

 

 

 

 

 

 

 

 

1.56

 

 

 

 

T. Jay Collins

 

  

 

 

 

 

10,599

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

10,599

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Steven A. Cossé

 

  

 

 

 

 

125,469

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

125,469

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lawrence R. Dickerson

 

  

 

 

 

 

6,451

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

6,451

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elisabeth W. Keller

 

  

 

 

 

 

209,909

 

 

 

 

  

 

 

 

 

845,546

 

 

 

 

  

 

 

 

 

200,000

 

 

(3) 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

1,255,455

 

 

 

 

 

 

 

 

 

 

 

 

 

 

James V. Kelley

 

  

 

 

 

 

44,488

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

44,488

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walentin Mirosh

 

  

 

 

 

 

17,941

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

17,941

 

 

 

 

 

 

 

 

 

 

 

 

 

 

R. Madison Murphy

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

2,393,007

 

 

 

 

  

 

 

 

 

1,590,053

 

 

(4) 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

3,983,060

 

 

(5) 

 

 

 

 

 

 

2.30

 

 

 

 

Jeffrey W. Nolan

 

  

 

 

 

 

295,055

 

 

 

 

  

 

 

 

 

283,252

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

578,307

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Neal E. Schmale

 

  

 

 

 

 

60,250

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

60,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Laura A. Sugg

 

  

 

 

 

 

4,443

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

4,443

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Roger W. Jenkins

 

  

 

 

 

 

268,895

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

803,609

 

 

 

 

  

 

 

 

 

1,072,504

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John W. Eckart

 

  

 

 

 

 

88,923

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

158,639

 

 

 

 

  

 

 

 

 

247,562

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eugene T. Coleman

 

  

 

 

 

 

37,547

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

188,826

 

 

 

 

  

 

 

 

 

226,373

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Michael K. McFadyen

 

  

 

 

 

 

77,675

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

208,326

 

 

 

 

  

 

 

 

 

286,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walter K. Compton

 

  

 

 

 

 

78,838

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

167,758

 

 

 

 

  

 

 

 

 

246,596

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Directors and executive officers as a group(6)

 

  

 

 

 

 

2,333,456

 

 

 

 

  

 

 

 

 

5,161,343

 

 

 

 

  

 

 

 

 

1,999,773

 

 

 

 

 

 

 

 

 

1,901,559

 

 

 

 

  

 

 

 

 

11,396,131

 

 

 

 

 

 

 

 

 

6.59

 

 

 

(1) Includes Company Thrift (401(k)) Plan shares in the following amounts: Mr. Cossé—25,350 shares; Mr. Jenkins—5,054 shares; Mr. Eckart—13,312 shares; Mr. Coleman—5,124 shares; Mr. McFadyen—846 shares; Mr. Compton—8,126 shares.
(2) Includes shares held by spouse and other household members as follows: Mr. Deming—48,006 shares; Mr. Nolan—49,392 shares.
(3) Ms. Keller has no investment power for these shares.
(4) Includes 631,650 shares held by a private foundation of which Mr. Murphy is President for which beneficial ownership is expressly disclaimed and 958,403 shares held by a limited partnership that is controlled by a limited liability company of which Mr. Murphy is a member. Mr. Murphy and his wife have beneficial interest in 203,533 of the shares held by the limited partnership.
(5) Total includes 65,000 shares that are pledged as security.
(6) Includes eleven directors, thirteen executive officers and one director/officer.

 

 

 

     16  |     Murphy Oil Corporation


Table of Contents

Security Ownership of Management (continued)  

 

 

 

LOGO

 

 

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under the securities laws of the United States, the Company’s directors and executive officers and persons who beneficially own more than 10% of the Company’s Common Stock are required to report their ownership of the Company’s Common Stock and any changes in that ownership to the Securities and Exchange Commission and the New York Stock Exchange. Specific due dates for these reports have been established and the Company is required to report in this Proxy Statement any failure to file by these dates. Based upon a review of the copies of the reports filed by the Company’s directors and executive officers pursuant to Section 16(a) of the Securities Exchange Act of 1934 and on representations from such reporting persons the Company believes that all such persons complied with all applicable filing requirements during fiscal 2017.

REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS AND CODE OF BUSINESS CONDUCT AND ETHICS

During 2017, the Company did not have any transactions with related persons required to be disclosed under Item 404(a) of Regulation S-K, and no such transactions are currently proposed. The Nominating & Governance Committee reviews ordinary course of business transactions with related parties, including firms associated with directors and nominees for director. The Company’s management also monitors such transactions on an ongoing basis. Executive officers and directors are governed by the Company’s Code of Business Conduct and Ethics, which provides that waivers may only be granted by the Board and must be promptly disclosed to stockholders. No such waivers were granted or applied for in 2017. The Company’s Corporate Governance Guidelines require that all directors recuse themselves from any discussion or decision affecting their personal, business or professional interests.

 

 

 

 

Murphy Oil Corporation   |     17       


Table of Contents

 

LOGO

 

  

Proposal 2—Advisory Vote to Approve
Executive Compensation

 

 

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“the Dodd-Frank Act”) enables the Company’s stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of the Named Executive Officers as disclosed in this Proxy Statement in accordance with the SEC’s rules. The Company has determined to submit Named Executive Officer compensation to an advisory (non-binding) vote annually. At the 2017 Annual Meeting, stockholders endorsed the compensation of the Company’s Named Executive Officers with over 97% of the votes cast supporting the proposal.

As described in detail under the heading “Compensation Discussion and Analysis,” the Company’s executive compensation programs are designed to attract, motivate, and retain the Named Executive Officers who are critical to the Company’s success. Under these programs, the Named Executive Officers are rewarded for the achievement of specific annual, long-term and strategic goals, corporate goals, and the realization of increased stockholder value. Please read the “Compensation Discussion and Analysis” along with the information in the compensation tables for additional details about the executive compensation programs, including information about the fiscal year 2017 compensation of the Named Executive Officers.

Stockholders are asked to indicate their support for the Named Executive Officer compensation as described in this

proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives stockholders the opportunity to express their views on the Named Executive Officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Named Executive Officers and the philosophy, policies and practices described in this proxy statement. Accordingly, stockholders are requested to vote “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in the Company’s Proxy Statement for the 2018 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 2017 Summary Compensation Table and the other related tables and disclosures.”

The say-on-pay vote is advisory, and therefore not binding on the Company, the Executive Compensation Committee or the Board of Directors. The Board of Directors and the Executive Compensation Committee value the opinions of stockholders and to the extent there is a significant vote against the Named Executive Officer compensation as disclosed in this proxy statement, the Executive Compensation Committee will consider stockholders’ concerns and will evaluate whether any actions are necessary to address those concerns.

 

 

 

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     18  |     Murphy Oil Corporation


Table of Contents

Proposal 3—Approval of the Proposed 2018
Stock Plan for Non-Employee Directors

 

 

 

LOGO

 

 

 

The Company’s standard arrangement for the compensation of non-employee directors divides remuneration into cash and equity components. This approach aligns the interests of directors and the stockholders they represent. The Company further targets total director compensation at a level near the 50th percentile of the competitive market (as determined by the Executive Compensation Committee’s (the “Committee”) independent compensation consultant, Pay Governance) enhancing the Company’s ability to retain and recruit qualified individuals. The Company believes this structure has been successful and, to continue in this vein, stockholders are asked to approve the 2018 Stock Plan for Non-Employee Directors (the “2018 Plan”), which is substantially similar to the 2013 Stock Plan for Non-Employee Directors which expires in May, 2018.

We believe that approving the 2018 Plan is necessary to allow the Company to continue to align the long-term financial interests of directors with those of the Company’s stockholders, to attract and retain those individuals by providing compensation opportunities that are competitive with other companies and provide incentives to those individuals who contribute significantly to the long-term performance and growth of the Company.

As a stockholder of the Company, you are invited to vote with respect to the 2018 Plan through the following resolution:

“RESOLVED, that the Company’s stockholders approve the 2018 Plan.”

The following is a summary of the 2018 Plan which is qualified in its entirety by the full text of the 2018 Plan, a copy of which is included as Exhibit A to this Proxy Statement. The capitalized terms not otherwise defined in this summary have the meaning assigned to them in the 2018 Plan.

Summary of Plan Terms

Shares Subject to the 2018 Plan

The Shares of the Company to be issued under the 2018 Plan consist of authorized but unissued Shares or issued Shares that have been reacquired by the Company, including Shares acquired in the open market. Subject to adjustment made in connection with a merger, consolidation, reorganization or certain other events set forth in the 2018 Plan, the maximum number of Shares subject to awards which may be issued pursuant to the 2018 Plan will be 500,000 Shares. If any grants under the 2018 Plan are cancelled, forfeited, expire or terminate for any reason without Shares having been issued, the Shares subject to, but not delivered under, such grants may again become available for the grant of other awards under the 2018 Plan. Notwithstanding the foregoing, no Shares deliverable to the Company in full or partial payment of the purchase price for Stock Options may again become

available for the grant of other awards under the 2018 Plan.

In no event will any individual director receive grants under the 2018 Plan in any calendar year with respect to Shares having an aggregate Fair Market Value (or in the case of stock options, the grant date value of such Stock Options as determined by the Committee) in excess of $750,000, as calculated at the time of grant.

Administration of the 2018 Plan

The 2018 Plan will be administered by a committee of the Board, designated by the Board and to be comprised of not less than two members of the Board (referred to in this section of the Proxy Statement as the “Committee”). Subject to the provisions of the 2018 Plan, the Committee will have sole and complete authority to construe and interpret the 2018 Plan, to establish, amend, and rescind the appropriate rules and regulations relating to the 2018 Plan, to determine the persons to whom and the time or times at which to grant awards, to administer the 2018 Plan and to take all such steps and make all such determinations in connection with the awards granted, as it may deem necessary or advisable to carry out the provisions and intent of the 2018 Plan.

Eligibility

All non-employee directors are eligible to receive awards under the 2018 Plan. Currently, the Company has eleven non-employee directors that will be eligible to receive awards under the 2018 Plan.

Types of Awards

The following types of awards may be made under the 2018 Plan. All of the awards described below are subject to the conditions, limitations, restrictions, exercise price, vesting and forfeiture provisions determined by the Committee, in its sole discretion, subject to such limitations as are provided in the 2018 Plan.

Non-qualified Stock Options

A Stock Option is a contractual right to purchase Shares at a future date at a specified exercise price. The per Share exercise price of a Stock Option will be determined by the Committee and may not be less than the Fair Market Value of a Share on the grant date. The exercise price of any Stock Option may be paid in Shares, cash, or a combination thereof, or other consideration, as determined by the Committee. Each Stock Option granted under the 2018 Plan will become exercisable and mature in three equal annual installments commencing on the first anniversary of the date of grant. Each Stock Option granted under the 2018 Plan will expire seven years from the date of grant.

 

 

 

 

Murphy Oil Corporation   |     19       


Table of Contents

 

LOGO

 

 

Proposal 3—Approval of the Proposed 2018
Stock Plan for Non-Employee Directors
(continued)    

 

 

 

 

Restricted Stock and Restricted Stock Units

A Restricted Stock Award is an award of Shares that does not vest until after a specified period of time, or satisfaction of other vesting conditions as determined by the Committee. Restricted Stock Units (“RSUs”) are awards denominated in units of Shares under which the issuance of Shares is subject to such conditions and terms as the Committee deems appropriate. To the extent determined by the Committee, Restricted Stock and RSUs may be satisfied or settled in Shares, cash or a combination thereof. Participants in whose name Restricted Stock is granted shall be entitled to receive all dividends and other distributions paid with respect to those Shares, unless otherwise determined by the Committee. Shares underlying RSUs are entitled to dividends or dividend equivalents only to the extent, and in the form, provided by the Committee. In no event will dividends or dividend equivalents be paid on awards that remain subject to performance measures unless and until the underlying performance measures are met. The Committee may provide for the ability of Participants to elect to defer the settlement of, or mandate the settlement of, RSUs to such time as may be elected by the Participant or determined by the Committee. Unless otherwise determined by the Committee, Participants holding awards of Restricted Stock may exercise full voting rights during the Restricted Period.

Termination of Service and Change in Control

Termination of Membership on the Board of Directors Because of Retirement or Disability. If a Participant’s membership on the Board of Directors terminates because of Retirement or Disability, any Stock Option held by the Participant may be exercised, in whole or in part, to the extent not previously exercised, only during the period (i) beginning on the later of (A) one year after the date of grant of such Stock Option or (B) the date of termination of membership on the Board of Directors due to Retirement or Disability; and (ii) ending on and including the earlier of (A) the last day of the original exercise period remaining under the applicable award agreement or (B) the third anniversary of the date of termination of membership on the Board of Directors due to Retirement or Disability. In addition, the restrictions will be lifted on all Restricted Stock and RSUs held by the Participant; provided that the settlement of any vested Deferred Units will remain subject to the terms of the underlying award agreement and any applicable deferral election form.

Termination of Membership on the Board of Directors Because of Death. If a Participant’s membership on the Board of Directors terminates because of death, any Stock Option held by the Participant may be exercised, in whole or in part, to the extent not previously exercised, only during the period

(i) beginning on the date of death; and (ii) ending on and including the earlier of (A) the last day of the original exercise period remaining under the applicable award agreement or (B) the third anniversary of the date of death. In addition, the restrictions will be lifted on all Restricted Stock and RSUs held by the Participant; provided that the settlement of any vested Deferred Units will remain subject to the terms of the underlying award agreement and any applicable deferral election form.

Death After Termination of Membership on the Board of Directors Because of Retirement or Disability. If a Participant dies after the Participant’s membership on the Board of Directors has terminated because of Retirement or Disability, any Stock Option held by the Participant may be exercised, in whole or in part, to the extent not previously exercised, only during the period (i) beginning on the date of death; and (ii) ending on and including the earlier of (A) the last day of the original exercise period remaining under the applicable award agreement or (B) the third anniversary of the date of termination of membership on the Board of Directors due to Retirement or Disability.

Termination of Membership on the Board of Directors for Reasons other than Retirement, Disability, Death or a Change in Control. If a Participant’s membership on the Board of Directors terminates for any reason other than Retirement, Disability, death or a Change in Control, the Stock Options held by such Participant, to the extent not previously vested, shall be forfeited at the time of such termination of membership on the Board of Directors. In addition, the Restricted Stock and RSUs held by such Participant, to the extent not previously vested, will be forfeited at the time of such termination of membership on the Board of Directors; provided that any vested Deferred Units will not be forfeited but shall settle in accordance with the terms of the underlying award agreement and any applicable deferral election form

Change in Control. Upon the occurrence of a Change in Control, all outstanding awards under the 2018 Plan will become immediately vested, exercisable and nonforfeitable, and will remain vested, exercisable and nonforfeitable during their remaining terms.

Amendment and Termination

The Board of Directors may amend, alter, or discontinue the 2018 Plan at any time, but no amendment, alteration, or discontinuation may be made which would impair the rights of a Participant under an award previously granted, without the Participant’s consent, or which would cause the 2018 Plan not to continue to comply with Rule 16b-3 under the Exchange Act, or any successor to such rule. Notwithstanding the above provisions, the Board of Directors will have broad authority to amend the 2018 Plan to take into account

 

 

 

 

     20  |     Murphy Oil Corporation


Table of Contents

Proposal 3—Approval of the Proposed 2018
Stock Plan for Non-Employee Directors
(continued)    

 

 

 

LOGO

 

 

 

changes in applicable securities and tax laws and accounting rules, as well as other developments. The 2018 Plan expires by its terms five years following its approval.

U.S. Federal Income Tax Consequences

The following is a brief summary of the principal United States federal income tax consequences of transactions under the 2018 Plan, based on current United States federal income tax laws. This summary is not intended to be exhaustive, does not constitute tax advice and, among other things, does not describe state, local or foreign tax consequences, which may be substantially different.

Non-Qualified Stock Options

Generally, a Participant will not recognize taxable income on the grant or vesting of a non-qualified stock option. Upon the exercise of a non-qualified stock option, a Participant will recognize ordinary income in an amount equal to the difference between the market price of the Shares received on the date of exercise and the stock option cost (number of Shares purchased multiplied by the exercise price per Share). The Company will ordinarily be entitled to a deduction on the exercise date equal to the ordinary income recognized by the Participant upon exercise.

Restricted Stock

A Participant generally will not be taxed at the time a Restricted Stock Award is granted but will recognize taxable ordinary income when the Award vests or otherwise is no longer subject to a substantial risk of forfeiture. The amount of taxable income will be the market price of the Shares at that time.

Participants may elect to be taxed at the time of grant by making an election under Section 83(b) of the Internal Revenue Code within 30 days of the award date. If a Restricted Stock Award subject to the Section 83(b) election is subsequently canceled, no tax deduction will be allowed for the amount previously recognized as income, and no tax previously paid will be refunded. Unless a Participant makes a Section 83(b) election, dividends paid to a Participant on Shares of an unvested Restricted Stock Award will be taxable to the Participant as ordinary income. If the Participant made

a Section 83(b) election, the dividends will be taxable to the Participant as dividend income.

The Company will ordinarily be entitled to a deduction at the same time and in the same amounts as the ordinary income recognized by the Participant. Unless a Participant has made a Section 83(b) election, the Company will also be entitled to a tax deduction, for dividends paid on unvested Restricted Stock Awards.

Restricted Stock Units

A Participant will generally not recognize taxable income on a RSU Award until Shares (or cash) subject to the Award are distributed. The amount of ordinary income will be the market price of the Shares on the date of distribution (or the amount of cash distributed). Any dividend equivalents paid on unvested RSUs are taxable as ordinary income when paid to the Participant.

The Company will ordinarily be entitled to a tax deduction at the same time and in the same amounts as the ordinary income recognized by the Participant. The Company will also be entitled to a deduction on any dividend equivalent payments made to the Participant.

New Plan Benefits

The size of the grant each year is based on competitive data provided by a major compensation consulting firm and actual grant amounts are determined by the Committee after assessing this data. Grants under the 2013 Stock Plan for Non-Employee Directors totaled 1,753 shares in 2013; 45,492 shares in 2014; 48,665 shares in 2015; 86,055 shares in 2016; 83,220 shares in 2017; and 77,803 shares in 2018.

The following table sets forth the 2019 benefits or amounts projected to be received by or allocated to certain individuals and groups under the 2018 Plan. These pro forma figures are based on actual 2018 awards under the Company’s current compensation program for non-employee directors; however, there is no assurance that the value to be realized by the individuals and groups will be at or near the indicated amounts.

 

 

 

 

Murphy Oil Corporation   |     21       


Table of Contents

 

LOGO

 

  

Proposal 3—Approval of the Proposed 2018
Stock Plan for Non-Employee Directors
(continued)      

 

 

 

     

 

Restricted Stock Units

 
     

 

Dollar Value
($)

 

    

 

Number of
Units

 

 

 

Claiborne P. Deming

 

    

 

200,024  

 

 

 

    

 

7,073   

 

 

 

 

T. Jay Collins

 

    

 

200,024  

 

 

 

    

 

7,073   

 

 

 

 

Steven A. Cossé

 

    

 

200,024  

 

 

 

    

 

7,073   

 

 

 

 

Lawrence R. Dickerson

 

    

 

200,024  

 

 

 

    

 

7,073   

 

 

 

 

Elisabeth W. Keller

 

    

 

200,024  

 

 

 

    

 

7,073   

 

 

 

 

James V. Kelley

 

    

 

200,024  

 

 

 

    

 

7,073   

 

 

 

 

Walentin Mirosh

 

    

 

200,024  

 

 

 

    

 

7,073   

 

 

 

 

R. Madison Murphy

 

    

 

200,024  

 

 

 

    

 

7,073   

 

 

 

 

Jeffrey W. Nolan

 

    

 

200,024  

 

 

 

    

 

7,073   

 

 

 

 

Neal E. Schmale

 

    

 

200,024  

 

 

 

    

 

7,073   

 

 

 

 

Laura A. Sugg

 

    

 

200,024  

 

 

 

    

 

7,073   

 

 

 

 

Non-Employee Director Group

 

    

 

2,200,264  

 

 

 

    

 

77,803   

 

 

 

The full text of the proposed plan is attached as Exhibit A to this Proxy Statement and incorporated by reference.

 

 

 

LOGO

 

 

 

     22  |     Murphy Oil Corporation


Table of Contents

 

Proposal 4—Approval of the Proposed 2018
Long-Term Incentive Plan

 

 

 

LOGO

 

 

 

As noted in the Compensation Discussion and Analysis section of the Proxy Statement, the 2012 Long-Term Incentive Plan (the “2012 LTI Plan”) was approved by stockholders on May 9, 2012 and will expire by its terms in 2022. On February 7, 2018, the Board of Directors approved the 2018 Long-Term Incentive Plan (the “2018 LTIP”), subject to approval by stockholders at the 2018 Annual Meeting. The Board of Directors has determined that it is in the best interests of stockholders to consider at the Annual Meeting whether to adopt the 2018 LTIP to replace the 2012 LTI Plan for granting new equity incentive awards. No awards have been granted under the 2012 LTI Plan since March 12, 2018 and, if the 2018 LTIP is approved by stockholders, no further awards will be granted under the 2012 LTI Plan.

As of March 12, 2018, there were 210,512 shares available for grant under the 2013 Stock Plan for Non-Employee Directors. Also, set forth below is information regarding shares currently outstanding under the 2012 LTI Plan as of March 12, 2018. The Company made its annual award grant to employees during the first quarter of 2018 and those awards are included in the data below.

As of March 12, 2018:

 

 

Stock options outstanding

 

   3,407,410

 

 

Weighted average exercise price

 

   $48.79

 

 

Weighted average term

 

   3.9 years

 

 

Full value awards outstanding

 

   3,121,472

 

 

Shares remaining for grant under the 2012 LTI Plan

 

   2,057,258

 

The 2018 LTIP has a 10-year life so as to allow the Company to respond to changes in the competitive marketplace, regulatory actions, and changes to business strategy.

We believe that approving the 2018 LTIP is necessary in order to allow the Company to continue to align the long-term financial interests of its officers and other key employees with those of the Company’s stockholders, to attract and retain those individuals by providing compensation opportunities that are competitive with other companies and provide incentives to those individuals who contribute significantly to the long-term performance and growth of the Company. The terms of the Company’s equity compensation awards are designed to encourage participating employees to focus on the long-term success of the Company. If the 2018 LTIP is not approved, then based on historical usage of shares under our equity plans and a range of possible grant date fair values, we would expect that the remaining shares available for future grant under the 2012 LTI Plan would likely be sufficient to grant annual equity incentive awards through 2019, after which time we would lose an important compensation tool aligned with the long-term interests of the Company’s stockholders.

The Board of Directors believes that approval of the 2018 LTIP is in the best interest of our stockholders and supports this proposal.

As a stockholder of the Company, you are invited to vote with respect to the 2018 LTIP through the following resolution:

“RESOLVED, that the Company’s stockholders approve the 2018 LTIP.”

The following is a summary of the 2018 LTIP which is qualified in its entirety by the full text of the 2018 LTIP, a copy of which is included as Exhibit B to this Proxy Statement. The capitalized terms not otherwise defined in this summary have the meaning assigned to them in the 2018 LTIP.

Summary of Plan Terms

Shares Subject to the 2018 LTIP

The Shares of the Company to be issued under the 2018 LTIP consist of authorized but unissued Shares or issued Shares that have been reacquired by the Company, including Shares acquired in the open market. Subject to adjustment made in connection with a merger, consolidation, reorganization or certain other events set forth in the 2018 LTIP, the maximum number of Shares subject to Awards which may be issued pursuant to the 2018 LTIP will be 6,750,000 Shares except that, to better manage the burn rate, the annual number of Shares granted from that pool will not exceed 1% of the Shares issued and outstanding at the beginning of each fiscal year as reported in the Company’s financial statements.

The aggregate number of Shares subject to all Awards granted under the 2018 LTIP during any calendar year to any one Employee will not exceed 500,000 and the maximum aggregate actual cash payment to any Participant shall not exceed $5,000,000. Shares subject to Awards that have been canceled, expired, forfeited or otherwise not issued under an Award and Shares subject to Awards settled in cash shall not count as Shares issued under the 2018 LTIP. Notwithstanding the foregoing, Shares subject to an Award may not be made available for issuance under the 2018 LTIP if such Shares were not issued under the net settlement or net exercise of a Stock Appreciation Right (“SAR”), were used to pay the exercise price of an Option, were delivered to or withheld by the Company to pay the withholding taxes related to an Option or a SAR, or were repurchased on the open market with the proceeds of an Option exercise. The number of Shares that may be granted as full value awards (Awards other than Options and SARs) shall not exceed 50% of the total Shares available for grant (3,375,000 Shares).

 

 

 

 

Murphy Oil Corporation   |     23       


Table of Contents

 

LOGO

 

  

 

Proposal 4—Approval of the Proposed 2018
Long-Term Incentive Plan
(continued)

 

 

 

Administration of the 2018 LTIP

The 2018 LTIP will be administered by the Executive Compensation Committee of the Board of Directors (referred to in this section of the Proxy Statement as the “Committee”). In addition to any implied powers and duties that may be necessary or appropriate to carry out the provisions of the 2018 LTIP, the Committee will have all of the powers vested in it by the terms of the 2018 LTIP, including exclusive authority to select the employees to be granted Awards, to determine the type, size and terms of the Awards to be made to each employee selected, to determine the time when Awards will be granted, and to prescribe the form of the agreements embodying Awards made under the 2018 LTIP. The Committee is authorized to interpret the 2018 LTIP and the Awards granted, to establish, amend and rescind any rules and regulations relating to the 2018 LTIP, to make any other determinations which it believes necessary or advisable for the administration of the 2018 LTIP, and to correct any defect or supply any omission or reconcile any inconsistency in the 2018 LTIP or in any Award in the manner and to the extent the Committee deems desirable to carry it into effect.

Eligibility

Any employee of the Company, or a Subsidiary or affiliate that does not maintain a similar plan, who is an officer or who serves in any other key administration, professional, or technical capacity, and in the discretion of the Committee, any Employee who has made an unusual contribution, is eligible to receive Awards under the 2018 LTIP. The basis for participation in the 2018 LTIP is the Committee’s decision, in its sole discretion, that an Award to an eligible Participant will further the 2018 LTIP’s purposes. In exercising its discretion, the Committee will consider the purposes of the 2018 LTIP, which are to align the long-term financial interests of eligible employees with those of the Company’s stockholders, to attract and retain those individuals by providing compensation opportunities that are competitive with other companies and provide incentives to those individuals who contribute significantly to the long-term performance and growth of the Company. As of March 12, 2018, we expect that approximately 500 employees will be eligible to receive Awards under the 2018 LTIP.

Types of Awards

The following types of Awards may be made under the 2018 LTIP. All of the Awards described below are subject to the conditions, limitations, restrictions, exercise price, vesting and forfeiture provisions determined by the Committee, in its sole discretion, subject to such limitations as are provided in the 2018 LTIP. In addition, subject to the limitations provided in the 2018 LTIP and in accordance with applicable law, the Committee may accelerate or defer the vesting or payment of

Awards, cancel or modify outstanding Awards, and waive any conditions or restrictions imposed with respect to Awards or the Shares issued pursuant to Awards. As of February 28, 2018, the equity awards outstanding under our equity compensation plans were held by approximately 600 current and former employees.

Non-qualified Stock Options

An Option is a contractual right to purchase Shares at a future date at a specified exercise price. The per Share exercise price of an Option will be determined by the Committee and may not be less than the Fair Market Value of a Share on the grant date. The exercise price of any Option may be paid in Shares, cash, or a combination thereof, as determined by the Committee. Other than as provided in the 2018 LTIP with respect to certain changes in capitalization or other corporate transactions, the exercise price of an Option may not be reduced without stockholder approval. The dates on which Options become exercisable will be determined at the sole discretion of the Committee, provided that no Option will be exercisable more than seven years from the grant date. Options that are intended to qualify as incentive stock options must meet the requirements of Section 422 of the Internal Revenue Code. The maximum number of Shares that may be issued under the 2018 LTIP through incentive stock options is 1,000,000 Shares.

Stock Appreciation Rights

SARs represent a contractual right to receive, in cash or other property (including Shares), an amount equal to the appreciation of a Share from the grant date based on the exercise price of the SAR (which may not be less than 100% of the Fair Market Value of a Share on the grant date), multiplied by the number of Shares subject to the SAR.

Restricted Stock and Restricted Stock Units

A Restricted Stock Award is an Award of outstanding Shares that does not vest until after a specified period of time, or satisfaction of other vesting conditions as determined by the Committee. Restricted Stock Units (“RSUs”) are Awards denominated in units of Shares under which the issuance of Shares (or the payment of cash based on the value of Shares) is subject to such conditions and terms as the Committee deems appropriate. To the extent determined by the Committee, Restricted Stock and RSUs may be satisfied or settled in Shares, cash or a combination thereof. Participants in whose name Restricted Stock is granted will be entitled to receive all dividends and other distributions paid with respect to those Shares, unless otherwise determined by the Committee. Shares underlying RSUs are entitled to dividends or dividend equivalents only to the extent, and in the form,

 

 

 

 

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Proposal 4—Approval of the Proposed 2018
Long-Term Incentive Plan
(continued)

 

 

 

LOGO

 

 

 

provided by the Committee. Unless otherwise determined by the Committee, Participants holding Awards of Restricted Stock may exercise full voting rights during the Restricted Period.

Performance Units and Performance Shares

A Performance Share is an Award of outstanding Shares that does not vest until the satisfaction of performance criteria, and any other vesting conditions, specified by the Committee. Performance Shares are Awards denominated in units of Shares under which the issuance of Shares (or the payment of cash based on the value of Shares) is subject to the satisfaction of performance criteria, and any other vesting conditions, specified by the Committee. Performance criteria are based on the Company’s attainment of performance measures to be established by the Committee, in its sole discretion. Notwithstanding the satisfaction of any performance goals, to the extent specified in the Agreement, the Committee may reduce the number of Shares granted, issued, retainable or vested on the basis of any further considerations as determined by the Committee in its discretion. The settlement of Performance Units and Performance Shares may be in cash, Shares of equivalent value, or in some combination thereof, as set forth in the Agreement.

Other Stock-Based Incentives

The Committee is authorized to grant other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares.

Termination of Service and Change in Control

Except as otherwise determined by the Committee, in the event a Participant’s employment terminates by reason of Normal Termination (as defined below) or death, (i) any Options and SARs granted to such Participant which are then outstanding and vested may be exercised at the earlier of any time prior to the expiration of the term of the Options or SARs or within two (2) years after the date of termination, (ii) any shares of Restricted Stock or RSUs then outstanding and unvested will vest on the date of the Participant’s termination in a pro-rated amount, and (iii) any Performance Shares or Performance Units then outstanding and unvested will remain eligible to vest at the conclusion of the applicable performance period. Unless otherwise determined by the Committee, in the event the employment of the Participant terminates for any reason other than Normal Termination or death, all unvested Awards will be forfeited and any options and SARs granted to such employee which are then outstanding will be canceled. For purposes of the 2018 LTIP, “Normal Termination” is defined as a termination of

employment (i) at normal retirement age as defined in the Retirement Plan of the Company, (ii) for total and permanent disability as defined in the Life Insurance Plan for employees of the Company, or (iii) with Company approval, and without being terminated for cause.

Unless the Committee determines otherwise, notwithstanding any other provision of the 2018 LTIP to the contrary, upon a Change in Control, all outstanding unvested Awards will vest (with any applicable performance measures deemed achieved at the target level of performance), become immediately exercisable or payable or will have all restrictions lifted as may apply to the type of Award.

Minimum Vesting Requirements

Subject to the specified treatment under the 2018 LTIP upon a termination of employment or a Change in Control, Awards will vest over a period of not less than one year following the grant date; provided, however, that the Committee may grant Awards that are not subject to this minimum vesting requirement with respect to 5% or less of the Shares available for issuance under the 2018 LTIP.

Amendment and Termination

The Board of Directors may amend, alter or discontinue the 2018 LTIP and the Committee may amend, or alter any Agreement or other document evidencing an Award made under the 2018 LTIP. However, no such action will be made which would impair the rights of the holder of an Award, without such holder’s consent, provided that no such consent will be required if the Committee determines in its sole discretion and prior to the date of any Change of Control that such amendment or alteration either is required or advisable in order for the Company, the 2018 LTIP or the Award to satisfy any law or regulation or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard. Stockholder approval is required to: (a) increase the maximum number of shares for which Awards may be granted; (b) reduce the price at which Options or SARs may be granted below the price provided for in the 2018 LTIP;(c) reduce the exercise price of outstanding Options or SARs; (d) extend the term of the 2018 LTIP; (e) change the class of persons eligible to participate in the 2018 LTIP; or (f) otherwise amend the 2018 LTIP in any manner requiring stockholder approval by law or under the applicable stock exchange listing requirements.

Clawback

Each Agreement will provide that a Participant whose negligent, intentional or gross misconduct contributes to the Company’s having to restate all or a portion of its financial

 

 

 

 

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LOGO

 

  

 

Proposal 4—Approval of the Proposed 2018
Long-Term Incentive Plan
(continued)

 

 

 

statements, will immediately forfeit the Participant’s Awards, and the Participant shall be required to reimburse the Company in respect of any Shares issued or payments made under the 2018 LTIP in the period covered by such financial statements, as determined in each case, by the Committee in good faith. Any Awards granted under the 2018 LTIP (including any amounts or benefits arising from such Awards) may also be subject to any clawback or recoupment arrangements or policies the Company establishes from time to time.    

U.S. Federal Income Tax Consequences

The following is a brief summary of the principal United States federal income tax consequences of transactions under the 2018 LTIP, based on current United States federal income tax laws. This summary is not intended to be exhaustive, does not constitute tax advice and, among other things, does not describe state, local or foreign tax consequences, which may be substantially different.

Non-Qualified Stock Options

Generally, a Participant will not recognize taxable income on the grant or vesting of a non-qualified stock option. Upon the exercise of a non-qualified stock option, a Participant will recognize ordinary income in an amount equal to the difference between the market price of the Shares received on the date of exercise and the Option cost (number of Shares purchased multiplied by the exercise price per Share). The Company will ordinarily be entitled to a deduction on the exercise date equal to the ordinary income recognized by the Participant upon exercise.

Incentive Stock Options

No taxable income is recognized by a Participant on the grant or vesting of an incentive stock option. If a Participant exercises an incentive stock option in accordance with its terms and does not dispose of the Shares acquired within two years after the date of the grant of the incentive stock option or within one year after the date of exercise, the Participant will be entitled to treat any gain related to the exercise of the incentive stock option as capital gain (instead of ordinary income). However, the excess of the market price over the exercise price of the Shares acquired is an item of adjustment in computing the alternative minimum tax of the Participant. In this case, the Company will not be entitled to a deduction by reason of the grant or exercise of the incentive stock option. If a Participant holds the Shares acquired for at least one year from the exercise date and does not sell or otherwise dispose of the Shares for at least two years from the grant date, the Participant’s gain or loss upon a subsequent sale will be long-term capital gain or loss equal to the difference between the amount realized on the sale and the Participant’s

basis in the Shares acquired. If a Participant sells or otherwise disposes of the Shares acquired without satisfying the required minimum holding periods, such “disqualifying disposition” will give rise to ordinary income equal to the excess of the market price of the Shares acquired on the exercise date (or, if less, the amount realized upon the disqualifying disposition) over the Participant’s tax basis in the Shares acquired. The Company will ordinarily be entitled to a deduction equal to the amount of the ordinary income resulting from a disqualifying disposition.

Stock Appreciation Rights

Generally, a Participant will not recognize taxable income upon the grant or vesting of a SAR, but will recognize ordinary income upon the exercise of a SAR in an amount equal to the cash amount received upon exercise (if the SAR is cash-settled) or the difference between the market price of the Shares received from the exercise of the SAR and the amount, if any, paid by the Participant in connection with the exercise of the SAR. The Participant will recognize ordinary income upon the exercise of a SAR regardless of whether the Shares acquired upon the exercise of the SAR are subject to further restrictions on sale or transferability. The Participant’s basis in the Shares will be equal to the ordinary income attributable to the exercise and the amount, if any, paid in connection with the exercise of the SAR. The Participant’s holding period for Shares acquired pursuant to the exercise of a SAR begins on the exercise date. Upon the exercise of a SAR, the Company will ordinarily be entitled to a deduction in the amount of the ordinary income recognized by the Participant.

Restricted Stock

A Participant generally will not be taxed at the time a Restricted Stock Award is granted but will recognize taxable ordinary income when the Award vests or otherwise is no longer subject to a substantial risk of forfeiture. The amount of taxable income will be the market price of the Shares at that time.

Participants may elect to be taxed at the time of grant by making an election under Section 83(b) of the Internal Revenue Code within 30 days of the award date. If a Restricted Stock Award subject to the Section 83(b) election is subsequently canceled, no tax deduction will be allowed for the amount previously recognized as income, and no tax previously paid will be refunded. Unless a Participant makes a Section 83(b) election, dividends paid to a Participant on Shares of an unvested Restricted Stock Award will be taxable to the Participant as ordinary income. If the Participant made a Section 83(b) election, the dividends will be taxable to the Participant as dividend income.

 

 

 

 

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Proposal 4—Approval of the Proposed 2018
Long-Term Incentive Plan
(continued)

 

 

 

LOGO

 

 

The Company will ordinarily be entitled to a deduction at the same time and in the same amounts as the ordinary income recognized by the Participant. Unless a Participant has made a Section 83(b) election, the Company will also be entitled to a tax deduction, for dividends paid on unvested Restricted Stock Awards.

Restricted Stock Units

A Participant will generally not recognize taxable income on a RSU Award until Shares (or cash) subject to the Award are distributed. The amount of ordinary income will be the market price of the Shares on the date of distribution (or the amount of cash distributed). Any dividend equivalents paid on unvested RSUs are taxable as ordinary income when paid to the Participant.

The Company will ordinarily be entitled to a tax deduction at the same time and in the same amounts as the ordinary income recognized by the Participant. The Company will also be entitled to a deduction on any dividend equivalent payments made to the Participant.

New Plan Benefits

Any awards under the 2018 LTIP will be at the discretion of the Committee and future award amounts cannot be determined at this time.

The full text of the proposed plan is attached as Exhibit B to this Proxy Statement and incorporated by reference.

 

 

 

 

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LOGO

 

  

Compensation Discussion and Analysis

 

 

BACKGROUND

Murphy Oil Corporation is an independent exploration and production (“E&P”) company with a portfolio of global offshore and North American onshore assets delivering high margin production. Murphy produces oil and natural gas in the United States, Canada and Malaysia. The Company’s long-term strategy as an independent E&P company is focused on the following key priorities that management believes will drive value for its stockholders: (1) develop differentiated perspectives in underexplored basins and plays; (2) continue to be a preferred partner to national oil companies and regional independents; (3) provide balance to the global offshore business by developing unconventional onshore plays in North America; (4) develop and produce fields in a safe, responsible, timely and cost effective manner; and (5) achieve and maintain a sustainable, profitable, high margin portfolio.

This Compensation Discussion and Analysis (“CD&A”) provides stockholders with an understanding of the Company’s compensation philosophy, objectives, policies and practices in place during 2017, as well as factors considered by the Executive Compensation Committee of the Board of Directors (referred to in this CD&A as the “Committee”) in making compensation decisions for 2017. For your reference, the Company’s CD&A is outlined in the following sections:

 

 

   Executive Summary

 

 

 

Page   

 

 

•   The Company’s 2017 Operational and Financial Highlights

 

 

 29

 

•   Impact of 2017 Company Performance on Executive Compensation

 

 

 30

 

•   Actions Related to 2017 Performance

 

 

 31

 

•   CEO Compensation

 

 

 32

 

•   Other NEO Compensation

 

 

 32

 

•   Stockholder Engagement

 

 

 32

 

•   Compensation and Corporate Governance Policies – “What We Do” and “What We Don’t Do”

 

 

 33

Introduction  

 34

Guiding Principles  

 35

 

•   Risk Evaluation

 

 

 36

Elements of Compensation  

 36

 

A. Base Salary

 

 

 36

 

B. Annual Incentive Plan

 

 

 36

 

C. Long-Term Incentive Compensation

 

 

 38

 

D. Employee Benefits and Perquisites

 

 

 40

Actions Related to 2018 Executive Compensation  

 41

Executive Compensation Committee Report  

 43

EXECUTIVE SUMMARY

This CD&A focuses on the compensation of the Company’s Named Executive Officers (“NEOs”) listed below, whose compensation is set forth in the Summary Compensation table and other compensation tables contained in the proxy statement.

 

 

 Name

 

  

 

Title

 

 

Roger W. Jenkins

 

  

President & Chief Executive Officer

 

 

John W. Eckart

 

  

 

Executive Vice President & Chief Financial Officer

 

 

Eugene T. Coleman

 

  

 

Executive Vice President, Offshore

 

 

Michael K. McFadyen

 

  

 

Executive Vice President, Onshore

 

 

Walter K. Compton

 

  

 

Executive Vice President & General Counsel

 

The Company’s compensation plans and practices are designed to align the financial interests of the above NEOs with the financial interests of its stockholders. To that end, NEOs are provided with a competitive base salary, an annual cash bonus opportunity based on the achievement of specific goals aligned with stockholder value creation and long-term incentives.

 

 

 

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Compensation Discussion and Analysis (continued)

 

 

 

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THE COMPANY’S 2017 OPERATIONAL AND FINANCIAL HIGHLIGHTS

During fiscal year 2017, Murphy implemented a more comprehensive effort to build an even more dynamic exploration and production company. The Company continued to focus on delivering high-margin production from a diversified portfolio while continuing to reduce costs. This was achieved while funding the $976 million annual capital program and maintaining a competitive dividend yield from operating cash flows. The Company maintained approximately $1.0 billion cash and cash equivalents on the balance sheet over the course of 2017. Murphy achieved production of approximately 164 thousand barrels of oil equivalent per day and replaced 123% of total reserves with one year finding and development costs of $13.09 per barrel of oil equivalent. The Onshore business continued to increase its low-breakeven well count and the exploration portfolio was replenished with strategic lower-risk, appropriate working interest opportunities. The Company believes that over the long-term, attaining its key strategic business objectives is fundamental to delivering total shareholder returns. Murphy’s specific achievements in 2017 include:

Kaybob Duvernay

 

  Increased production 31% from fourth quarter 2016 to fourth quarter 2017

 

  Successful appraisal program de-risked 250 locations with competitive low breakeven prices

Tupper Montney

 

  Driving value in low-cost North American natural gas play through successfully proving up multiple Montney zones and increasing estimated ultimate recoveries

 

  Achieved competitive netbacks through a combination of gaining physical access to diversified markets as well as current long-term forward sales contracts

U.S. Onshore

 

  Drove down lease operating expense to record-low of $6.70 per barrel of oil equivalent

 

  Progressing cube-style pad design that is expected to de-risk additional locations through efficient multi-stacked development plan

 

  Increasing estimated ultimate recoveries field-wide by enhancing completion strategies

 

  Built new onshore position in the Midland Basin of approximately 31,000 acres through grass roots leasing effort

Offshore

 

  Minimizing production declines at existing fields through innovative low-cost projects in Malaysia and Gulf of Mexico

 

  Acquired low-cost subsea wells in the Gulf of Mexico that flow to existing Murphy operated infrastructure

Exploration

 

  Renewed exploration portfolio with low-cost entries in Sergipe-Alagoas Basin in deepwater Brazil, and through a farm-in, increased the Company’s position in Vulcan Basin, Australia

 

  Advanced exploration plans with partner group in Mexico Deepwater block 5 with expected spud in fourth quarter 2018

 

  Solidified Gulf of Mexico 2018 drilling schedule (close to existing structure) by farming into King Cake prospect and planning for Samurai delineation well

Financial

 

  Income from continuing operations before income tax of $72 million

 

  Competitive dividend yield

 

  Maintained approximately $1.0 billion of cash and cash equivalents on the balance sheet

 

 

 

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Compensation Discussion and Analysis (continued)    

 

 

 

  Renegotiated the terms of its unsecured revolving credit facility, which remained undrawn at year-end, and now matures in 2021

 

  Issued $550 million of notes at 5.75% due in 2025, applying the proceeds to redeem existing notes that were to mature in December 2017

IMPACT OF 2017 COMPANY PERFORMANCE ON EXECUTIVE COMPENSATION

Murphy has structured its cash and equity-based compensation program to position approximately 90% of the CEO’s and 75%-80% of the other NEO’s target total direct compensation opportunity in at-risk compensation components tied to the achievement of short- and long-term performance criteria aligned with the Company’s business objectives. Actual at-risk compensation was lower than this targeted opportunity in 2017 due to reductions in long-term incentives received. In the judgment of the Committee, this reduced grant strategy fairly addressed the impact on the Company from the significant oil price collapse and still provided management with an opportunity to earn competitive long-term award values. Short-term incentives are paid in the form of annual cash bonus opportunities tied to the achievement of specific performance goals aligned with stockholder value creation. Long-term incentives combine performance-based restricted stock units (referred to in this CD&A as “PSUs” and time-based restricted stock units (referred to in this CD&A as “RSUs”) and stock options to provide a compensation opportunity aligned with the Company’s long-term stock performance, delivered through awards that are performance based in absolute and relative terms, while also encouraging retention.

 

 

 

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Compensation Discussion and Analysis (continued)  

 

 

 

LOGO

 

 

ACTIONS RELATED TO 2017 PERFORMANCE

 

 

   Base Salary

 

     

 

Annual Incentives

 

 

 

Long-Term Equity Incentives

 

 

•   No Adjustments to CEO Base Salary

 

 

The Company provides base salaries to its NEOs which are structured to reward executives for the performance of their regular duties and responsibilities associated with their management of the organization.

 

Murphy targets the 50th percentile (median) level of base salaries paid by a select group of 10 peer companies in the exploration and production sector.

 

During 2017, the Company made no adjustment to the base salary of its CEO. This is the third consecutive year in which the Company elected to keep the base salary of the CEO fixed. The base salaries of the other NEOs were adjusted to bring base salaries closer to the 50th percentile after two consecutive years in which the Company elected to keep other NEO’s base salaries fixed.

 

   

 

•   Exercised Negative Discretion on Annual Incentive Plan (“AIP”) Awards

 

The Murphy AIP is a performance-driven plan intended to comply with the requirements of a performance plan pursuant to Section 162(m) of the Internal Revenue Code (the “Code”) (prior to the amendment in 2017 to Section 162(m) of the Code. The Plan, which establishes threshold, target, and maximum levels of financial, strategic, and operational goals, is formulaic in its application and the Committee is permitted to adjust calculated awards by means of negative discretion.

 

For the fiscal year 2017, the AIP measured performance in the following areas:

 

•  EBITDA/BOE;

 

•  Lease Operating Expense/BOE;

 

•  Safety (Total Recordable Incident Rate);

 

•  Environmental (Spill Rate);

 

•  Production (BOEPD); and

 

•  Produced Proved Reserve Replacement

 

Based upon the Company’s performance during fiscal year 2017, Murphy met or exceeded the performance goals in four of the six areas measured. The AIP formula for the NEO positions resulted in an earned performance score of 153.83% of target.

 

Negative discretion in the amount of 12% to 20% was applied to each NEOs’ earned award.

 

 

 

 

 

 

•   Reduced Value of Long-Term Incentive Grants from Target for 2017

 

In February 2017, the Committee approved long-term incentive grants to the NEOs and all other long-term incentive plan participants for 2017. The number of stock options were reduced to remain compliant under provisions of the 2012 LTI Plan. The Committee awarded grants in the form of 54% of value in the form of PSUs; 17% of value in the form of stock options; and 29% of value in the form of RSUs. The Committee elected to award approximately 75% of the target long-term incentive value for the 2017 grants for each NEO and all other participants. In the judgment of the Committee, this grant strategy fairly addressed the significant oil price collapse’s impact on the Company and still provided management with an opportunity to earn competitive long-term award values.

 

The following provides a summary of the results for fiscal year 2017 based on relative TSR performance and the impact of such performance upon grants occurring in 2015, 2016, and 2017. The 2016 and 2017 grants of awards were compared to a different peer group than the 2015 awards.

 

    

 

2015
PSUs

 

 

 

2016
PSUs

 

 

 

2017
PSUs

 

 

Year 1

 

 

 

50.60%

 

 

 

122.00%

 

 

 

139.40%

 

 

Year 2

 

 

 

131.40%

 

 

 

139.40%

 

 

 

TBD   

 

 

Year 3

 

 

 

138.20%

 

 

 

TBD   

 

 

 

TBD   

 

 

Cumulative Years 1-3

 

 

 

101.10%

 

 

 

TBD   

 

 

 

TBD   

 

 

Total

 

 

 

105.33%

 

 

 

TBD   

 

 

 

TBD   

 

 

 

 

 

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Compensation Discussion and Analysis (continued)       

 

 

 

CEO COMPENSATION

The CEO recognized an increase in his total target direct compensation for fiscal year 2017 in consideration of both the Company’s and individual performance during the year. In February 2017, the Committee elected to hold the CEO’s base salary fixed at the level established at the end of fiscal year 2014 which was $1,300,000. Mr. Jenkins’ annual incentive award (cash bonus, payable in first quarter 2018) was paid at the level of $2,159,703, which represents 123.06% of his target award opportunity, a level commensurate with those of other plan participants. In February 2017, the Committee granted the CEO long-term incentive compensation with a grant date fair value of $7,480,580. In aggregate, Mr. Jenkins’ total direct compensation for 2017 was $10,940,283 which is a 62% increase in total compensation from his 2016 level of $6,766,910. In 2016, Mr. Jenkins’ long-term incentive compensation was granted significantly below target and in 2017, the Committee determined to address this matter to remain competitive with the Company’s peer group while also remaining compliant with the provisions of the 2012 LTI Plan.

OTHER NEO COMPENSATION

In February 2017, the Committee increased the base salaries for the other NEOs to bring these salaries closer to the 50th

percentile after two consecutive years in which the Company elected to keep executive base salaries fixed. This decision was based on both the CEO’s feedback as to each NEO’s performance and information provided by Pay Governance which indicated current base salary levels were below the target market positioning.

STOCKHOLDER ENGAGEMENT

The Company values the feedback and insights that it receives from its stockholders through ongoing dialogue. At the 2017 Annual Meeting, a proposal seeking an advisory vote on executive compensation for the Company’s NEOs (see “Tabular Information for Named Executive Officers”) was submitted to stockholders. Stockholders endorsed the Company’s NEO compensation, with over 97% of the votes cast indicating approval.

 

 

 

 

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Compensation Discussion and Analysis (continued)  

 

 

 

LOGO

 

 

COMPENSATION AND CORPORATE GOVERNANCE POLICIES – “What We Do” and “What We Don’t Do”

Murphy is committed to developing and implementing executive compensation and corporate governance policies which are directly aligned with the best interests of our stockholders. In this regard, we have adopted executive compensation practices which are considered to be “best practices” and which will ensure that we have put stockholder interests in the forefront. The following table lists the practices that Murphy has implemented which describe the best practices we have adopted as “What We Do” as well as a listing of practices identified as “What We Don’t Do” that we consider not to be aligned with our stockholders’ interests.

 

 

“What We Do”

 

  

“What We Don’t Do”

 

Stock Ownership Guidelines—The Company has adopted director and officer stock ownership guidelines which state that directors are to own and hold Company shares equal in value to five times the director’s annual cash retainer within five years of commencing Board service, whereas officers of the Company or any of its operating subsidiaries are expected to own and hold a number of shares at least equal in value to a multiple of base salary, depending upon the officer’s position (5.0 times for the CEO, 2.5 times for EVPs, 2.0 times for SVPs, and 1.0 times for VPs).

 

Pay for Performance—Murphy’s executive compensation program is driven by its pay for performance strategy and which is directly aligned with the achievement of Company business objectives, business strategies, and financial results. The Company has structured its executive compensation program such that the Company aims to generally provide more than 75% of a NEO’s direct compensation is in the form of variable compensation tied to Company performance through the annual incentive and long-term incentive compensation plans.

 

Restrictive Pledging Policy—The Company has adopted corporate governance guidelines which apply to directors and officers. A director or officer may not pledge Company securities, including the purchasing of Company securities on margin or holding Company securities in a margin account, until he or she has achieved the applicable stock ownership target specified in the guidelines above. Once such stock ownership target has been achieved, such director or officer is permitted to pledge Company securities in compliance with applicable law (including disclosure of such pledging in the Company’s Proxy Statement as required by SEC regulations), as long as all stock owned to satisfy the applicable stock ownership target remains unpledged. Any pledging of shares should be disclosed to the Company in advance.

 

Anti-Hedging Policy—The Company has implemented corporate governance guidelines that state: “Directors, officers, and employees are prohibited from engaging in any hedging transactions (including transactions involving options, puts, calls, prepaid variable forward contracts, equity swaps, collars and exchange funds, or other derivatives) that are designed to hedge or speculate on any change in the market value of the Company’s securities.”

 

Limited Perquisites—The Company’s executive officers, including the NEOs, receive no perquisites or special executive benefits, unless such benefits serve a reasonable purpose, such as limited use of Company aircraft by the CEO.

 

Clawback Provision—In connection with the Dodd-Frank Act, the Company has adopted a policy allowing for the recovering of incentive-based compensation under certain circumstances including a potential restatement of Company financial statements.

 

  

X  No Employment Agreements—The Company does not have written employment agreements specifying compensation levels and practices for its NEOs or any Company employee. The only written agreement in effect is the Company’s change in control protection for its CEO in the CEO’s Severance Protection Agreement which is only operative in the event that the CEO is involuntarily terminated without cause or terminates for specified good reason following a change in control transaction.

 

X  No Tax Gross-Up Payments—The Company does not provide its CEO or other NEOs with tax gross-up payments for any form of executive compensation, including the change in control severance compensation for the CEO.

 

X  No Backdating of Stock Options—Murphy has never engaged in the practice of backdating stock options or other forms of equity compensation.

 

X  No Payment of Dividends on Unearned Performance Awards—With respect to unearned long-term performance awards measured or paid in Company stock, the grantee will not receive dividends pursuant to such granted awards until such stock is earned and/or paid.

Independent Compensation Advisor—The Committee of the Board has retained the services of Pay Governance as its independent advisor regarding executive compensation issues facing the Committee. The Committee retains the right to engage, retain, and/or terminate the services of its advisory consultant in its full discretion. Pay Governance provides no other services to Murphy or the Committee beyond its executive compensation advisory services.

 

Annual Stockholder Say-on-Pay Vote—Since the inception of the stockholder advisory vote regarding Say-on-Pay, Murphy has allowed for such a vote annually and has received a highly favorable (95% or higher) voting result each year.

  

 

 

 

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Compensation Discussion and Analysis (continued)     

 

 

INTRODUCTION

 

The Committee oversees and approves the compensation of the NEOs. The Committee currently consists of four members, all of whom have been determined by the Board to satisfy the heightened independence requirements of the NYSE and the Company’s categorical independence standards. The Nominating & Governance Committee recommends nominees for appointment to the Committee annually and as vacancies or newly created positions occur. Committee members are appointed and approved by the Board and may be removed by the Board at any time. Members of the Committee during 2017 were Neal E. Schmale (Chair), T. Jay Collins, Walentin Mirosh and Jeffrey W. Nolan.

The Committee reviews and approves corporate goals and objectives relevant to the CEO’s and other NEO’s compensation and evaluates the CEO’s performance in light of these goals and objectives. Any decisions regarding the CEO’s compensation are made solely by the Committee based on that evaluation. For NEOs other than the CEO, the Committee considers the performance evaluations made by the CEO and the recommendations of the CEO.

The Committee administers and makes recommendations to the Board with respect to the Company’s incentive and equity-based compensation plans, and it reviews and approves awards granted under such plans.

As set forth in its charter, which can be found on the Company’s website http://ir.murphyoilcorp.com/phoenix.zhtml?c=61237&p=irol-govHighlights, the Committee has the sole authority to retain and terminate any compensation consultant to be used to assist in the evaluation of director, CEO or senior executive compensation and has the sole authority to approve the consultant’s fees and other retention terms. Advice and assistance from internal or external legal, accounting or other advisors is also available to the Committee. In 2017, the Committee again retained Pay Governance as an independent compensation consultant. All Pay Governance invoices were approved by the Committee’s Chair prior to payment. In its role as an advisor to the Committee, Pay Governance attended all three Committee meetings in 2017 and provided the Committee with objective and expert analyses, independent advice and information with respect to executive and director compensation. Pay Governance does not provide any other consulting services to the Committee or to the Company, other than those dealing with executive compensation and the compensation of non-employee directors. The Committee annually evaluates the performance and independence of Pay Governance. In 2017, Pay Governance delivered a letter to the Committee that provided full disclosure relating to Pay Governance’s relationship to the Company, taking into account the SEC’s Consultant Independence Factors and Pay Governance’s Independence Policy. The Committee has determined that there are no business or personal relationships between Pay Governance and the members of the Committee or the

Company’s executive officers that may create a conflict of interest impairing Pay Governance’s ability to provide independent objective advice to the Committee. Pay Governance provides the Committee with, among other things, an analysis of trends and compensation data for general industry, the oil and gas industry and a select group of comparator companies within the oil and gas industry. In 2017 the Committee used two separate peer groups in designing the compensation programs for the Company: the compensation peer group and the TSR peer group.

The Committee annually engages Pay Governance to determine appropriate comparator companies for purposes of peer compensation analysis. In 2014, Pay Governance recommended a bifurcated approach resulting in the selection of one group for general compensation comparisons and a larger second group for the Total Shareholder Return (TSR) calculation. In 2015, Pay Governance recognized the Company’s mix of onshore, offshore, domestic and international operations and selected a group of companies with business and labor rationales similar to those of the Company for compensation benchmarking. Pay Governance further noted that the relatively small number of companies in that group, coupled with a wide divergence in market capitalization, could lead to distortions in the calculation of relative total shareholder return and recommended that a larger group of companies be utilized for this purpose. Pay Governance reaffirmed this bifurcated approach in 2016 and 2017 and the table below sets forth the two sets of peer groups for each of 2017 and 2018.

 

 

  Company Name

 

 

 

2017

Compensation

Peer

 

 

 

2017

TSR

Peer

 

 

 

2018

Compensation

Peer

 

 

 

2018

TSR

Peer

 

 

 

Anadarko Petroleum Corporation

 

           •  

 

Apache Corporation

 

           •  

 

Cabot Oil & Gas Corporation

 

               •  

 

Chesapeake Energy Corporation

 

           •  

 

Cimarex Energy Co.

 

               •  

 

Devon Energy Corporation

 

           •  

 

 

Encana Corporation

 

 

           •  

 

EOG Resources, Inc.

 

           •  

 

Hess Corporation

 

           •  

 

Marathon Oil Corporation

 

           •  

 

Newfield Exploration Company

 

               •  

 

Noble Energy, Inc.

 

           •  

 

Pioneer Natural Resources Corporation

 

           •  

 

Range Resources Corporation

 

               •  

 

Southwestern Energy Corporation

 

               •  

 

Whiting Petroleum Corporation

 

               •  
 

 

 

 

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In addition to comparator company information, the Committee uses Mercer Human Resource Consulting Energy 27 survey information to determine competitive market pay levels for the NEOs. The Committee also reviews a special analysis of the competitive pay levels of the Company’s compensation peer group in establishing pay levels for the CEO and NEOs.

The Committee generally takes action on compensation matters, including the grant of long-term incentive awards, at its meeting held in conjunction with the February Board meeting. The exercise price of stock options is based on the average of the high and the low market price for the Company’s shares on the date of grant. At this meeting the Committee also considers adjustments to NEO base salary, annual incentive bonus opportunities and grants of long-term incentive awards. The Committee also meets at other times during the year as necessary and, in 2017, met three times.

GUIDING PRINCIPLES

The Committee bases its executive compensation decisions on principles designed to align the interests of executives with those of stockholders. The Committee intends compensation to provide a direct link with the Company’s objectives, business strategies and financial results. In order to motivate, attract and retain key executives who are critical to its long-term success, the Company believes that its pay package should be competitive with others in the oil and gas industry. In addition, the Company believes that executives should be rewarded for both the short-term and long-term success of the Company and, conversely, be subject to a degree of downside risk in the event that the Company does not achieve its performance objectives. In order to promote the long-term, as well as short-term interests of the Company, and to more closely align the interests of its key employees to those of its stockholders, the Company uses a mix of short-term and long-term incentives in its compensation packages. Individuals in primary positions to influence the growth of stockholder wealth have larger portions of their total compensation delivered in the form of equity-based long-term incentives. To this end, executives have a compensation package which includes a base salary, participation in a cash-based annual incentive plan, participation in an equity-based long-term incentive plan and certain other compensation, including customary benefits as discussed in Section D of Elements of Compensation in this CD&A. In addition, the compensation package for the CEO includes limited personal use of Company aircraft. The Company believes that this combination of base salary, short-term incentives, long-term incentives and employee benefits provides the best balance between the need for the Company to provide executive compensation which is competitive in the marketplace and

therefore necessary for recruiting and retention, and the desire to have management’s interests, motivations and prosperity aligned with the interests of the Company’s stockholders.

As in the prior year, the Company had no employment agreements with the NEOs in effect in 2017. In connection with his appointment to President and CEO, Mr. Jenkins has a Severance Protection Agreement dated August 7, 2013. The Company had no other severance protection, change in control or termination agreements with the NEOs in effect in 2017. Under the terms of the Company’s incentive plans, in the event of a change in control, each NEO would retain his “earned” compensation and all outstanding equity awards held by each NEO would vest, become immediately exercisable or payable, or have all restrictions lifted as may apply to the type of the award. Entry into employment or other agreements with the NEOs may be considered from time to time.

At the Company’s Annual Meeting of stockholders held on May 10, 2017, the Company’s stockholders had the opportunity to cast an advisory vote (a “say-on-pay” proposal) to approve the compensation of the NEOs, as disclosed in the Proxy Statement for the meeting. Stockholders approved the say-on-pay proposal by the affirmative vote of over 97% of the shares cast on that proposal. While the Committee believes this affirms stockholders’ support of the Company’s approach to executive compensation during 2016, and therefore did not materially change the overall approach to executive compensation in 2017, the Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for the NEOs.

At the 2017 Annual Meeting, the Company’s stockholders had the opportunity to cast an advisory vote (a “say-on-frequency” proposal) on how often the Company should include a say-on-pay proposal in its proxy statements for future annual meetings. Stockholders had the choice of voting to have the say-on-pay vote every year, every two years or every three years. The frequency receiving the highest number of votes was every year, which was consistent with the Board’s recommendation. In accordance with this vote, the Board decided to hold the say-on-pay advisory vote every year.

TAX AND ACCOUNTING CONSIDERATIONS

Section 162(m) of the Code generally limits the tax deductibility of annual compensation paid by public companies to certain executive officers to $1 million. Prior to the enactment of the Tax Cuts and Jobs Act of 2017 (TCJA), Section 162(m) provided an exemption from this limitation for “qualified performance-based compensation.” However, the TCJA repealed the “qualified performance-based compensation” exemption, effective for taxable years beginning after December 31, 2017. The TCJA provides

 

 

 

 

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transition relief for certain contractual arrangements in place as of November 2, 2017; however, the scope of this transition relief is uncertain, and in the absence of any rulemaking at this time, the full impact of the TCJA’s changes to Section 162(m) of the Code on our executive compensation program is not yet known.

The Committee takes into consideration the accounting and tax implications of compensation and benefit programs, including with respect to the tax deductibility of compensation paid under Section 162(m) of the Code. The 2017 Annual Incentive Plan (the “2017 Plan”) and the 2012 Long-Term Incentive Plan (the “2012 LTI Plan”) were intended, prior to the repeal of the “qualified performance-based compensation” exception, to provide the Committee the ability to grant performance-based compensation that was deductible under Section 162(m) of the Internal Revenue Code. The Committee has not adopted a policy requiring compensation to be tax deductible to maintain flexibility in structuring executive compensation to attract highly qualified executive talent and to further our business goals and compensation philosophy.

RISK EVALUATION

In order to monitor the risk associated with executive compensation, in October 2017, the Committee reviewed a report from Pay Governance assessing the risks arising from the Company’s compensation policies and practices. The Committee agreed with the report’s findings that these risks were within the Committee’s ability to effectively monitor and manage and the programs do not encourage unnecessary or excessive risk-taking and do not create risks that are reasonably likely to have a material adverse effect on the Company.

ELEMENTS OF COMPENSATION

The Company’s executive compensation program includes a base salary, participation in an annual cash-based incentive plan, long-term incentive compensation, employee benefits and limited perquisites. The Committee believes that a majority of an executive officer’s total direct compensation opportunity (which includes base salary, annual and long-term incentive opportunities) should be performance-based. The Committee determines an executive’s total direct compensation opportunity based on compensation peer company information and survey data provided by Pay Governance to ensure the program is competitive with the compensation peer group in order to attract and retain talented executives.

The elements of the Company’s executive compensation program are outlined in more detail herein.

A.     Base Salary

The objectives of the base salary component of compensation include:

 

1) to provide a fixed level of compensation to compensate the executive for day-to-day execution of primary duties and responsibilities;

 

2) to assist the Company in the attraction and retention of a highly skilled competitive leadership team by paying base salaries competitive with those paid by the Company’s compensation peer group; and

 

3) to provide a foundation level of compensation upon which incentive opportunities can be added to provide the motivation to deliver superior performance.

The Company targets the median (“50th percentile”) of competitive market pay levels for the base salary of the NEOs. The Company targets the 50th percentile because it believes that it allows the organization to recruit, attract, and retain qualified management talent having the requisite skills and competencies to manage the Company and to deliver additional value for stockholders. In practice, some executives are paid above or below the 50th percentile because of their individual job performance, time in the position, and/or tenure with the Company, and in some cases, potential for advancement. Executives’ salaries are ultimately determined based on the market pay levels, as well as a combination of experience, duties and responsibilities, individual performance, Company performance, general economic conditions and marketplace compensation trends. The Committee made adjustments to the base salaries of the NEOs in 2017 as follows:

 

 

  Named Executive Officer

 

  

 

2016

Base Salary

 

    

 

2017

Base Salary

 

    

 

Adjustment

for 2017

 

 

 

Roger W. Jenkins

 

      $

 

1,300,000

 

 

 

      $

 

1,300,000

 

 

 

    

 

  0.0

 

 

 

John W. Eckart*

 

      $

 

515,000

 

 

 

      $

 

566,500

 

 

 

    

 

10.0

 

 

 

Eugene T. Coleman

 

      $

 

562,000

 

 

 

      $

 

576,050

 

 

 

    

 

  2.5

 

 

 

Michael K. McFadyen**

 

      $

 

450,909

 

 

 

      $

 

462,274

 

 

 

    

 

  2.5

 

 

 

Walter K. Compton

 

 

      $

 

541,000

 

 

 

      $

 

557,230

 

 

 

    

 

  3.0

 

 

* Mr. Eckart received a 10% increase in 2017 due to the Company’s phased approach to bring his base salary closer to the midpoint of the Company’s peer group.
** Mr. McFadyen is paid in Canadian dollars. His base salary is C$581,111 and he received a 2.5% increase in 2017. The currency conversation factor utilized throughout this compensation discussion and analysis is 0.7955 Canadian dollars to one U.S. dollar.

B. Annual Incentive Plan

The objectives of the Company’s annual incentive program are:

 

1) to provide cash-based incentive compensation linked to Company performance to those officers, executives, and key employees who contribute significantly to the growth and success of the Company;
 

 

 

 

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2) to attract and retain individuals of outstanding ability;

 

3) to align the interests of those who hold positions of major responsibility in the Company with the interests of the Company’s stockholders; and

 

4) to encourage excellent operational performance by rewarding executives when they achieve this.

The Committee targets the 50th percentile of competitive market pay levels for its annual target incentive

compensation because the Committee believes it allows the Company to motivate its executives. Executives have the opportunity to be compensated above the median of market pay levels when the Company has above market performance based on established performance measures. In February 2017, the Committee reviewed an analysis of the top executives prepared by Pay Governance. For 2017, the target bonus percentages of the Company’s NEOs were at the median of the competitive market and no adjustments were made to the target bonus percentage amount.

 

 

The 2017 Plan provides the Committee with a list of performance criteria to be used for determination of performance-based awards.

For 2017, the performance criteria utilized by the Committee included a mixture of a safety performance metric, an environmental performance metric, financial metrics, and operating metrics designed to work across the Company.

 

 

2017 Performance Criteria

 

 

Safety: Total Recordable Incident Rate (TRIR)

  

 

The Company’s TRIR is calculated as the combined number of incidents for both contractors and employees worldwide per 200,000 work hours. The health and safety of the Company’s employees and contractors is important to the Company. Inclusion of a safety metric reflects the Company’s emphasis on safe operations by both employees and contractors.

 

 

Environmental: Spill Rate

  

 

The Company’s global spill rate is calculated as number of spills equal to or greater than one barrel per million BOEs (1) produced. Inclusion of a spill metric reflects the Company’s commitment to environmentally sound operations.

 

 

Financial:

EBITDA/BOE(1)

Lease Operating Expense (“LOE”)/BOE(1)

  

 

These financial goals focus on financial discipline and encourage employees to manage costs relative to gross margins and the commodity price environment.

 

 

Operational:

Reserves Replacement

Production Target (BOEPD)(2)

  

 

The primary business objectives for an exploration and production company are to find oil and gas reserves at a competitive cost while generating economic value for its stockholders and assuring that reserves are prudently converted into production and ultimately cash flow. Including specific operational goals on reserves additions (excluding acquisitions and divestitures) and production volumes provides a direct line of sight for the Company’s employees of their impact in the Company’s operational success.

 

(1) A barrel of oil equivalent (BOE) is a term used to summarize the amount of energy that is equivalent to the amount of energy found in one barrel of crude oil. One barrel of oil is generally deemed to have the same amount of energy content as 6,000 cubic feet of natural gas.
(2) Barrels of oil equivalent per day (BOEPD) is a term that is used in conjunction with the production or distribution of oil and natural gas.

With respect to the NEOs, the following table summarizes the performance metrics, respective weighting of performance metrics and weighted performance scores based on actual performance, used in determining their respective annual incentive awards for 2017. The targets for performance metrics were primarily based on historical data, budgets and forecasts. Under the terms of the 2017 Plan, achievement of 100% of the target rate results in the payment of 100% of individual target awards. For NEOs, achievement of the minimum of the performance range results in the payment of 62.5% of individual target awards and achievement of the maximum results in the payment of 250% of individual target awards, in each case subject to a discretionary

 

 

 

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downward adjustment by the Committee of up to 100%. Upward adjustments are not permitted for NEOs and no awards are payable if performance falls below the minimum.

 

      2017 AIP Metrics and Results  
Metric    Threshold     Target     Maximum    

Actual

Results

   

Payout

Achieved

(%)

    Weighting      Result  

TRIR

 

    

 

0.40

 

 

 

   

 

0.28

 

 

 

   

 

0.00

 

 

 

   

 

0.40

 

 

 

   

 

62.55

 

 

   

 

7.50%

 

 

 

    

 

4.69%

 

 

 

Spill Rate

 

    

 

0.20

 

 

 

   

 

0.13

 

 

 

   

 

0.00

 

 

 

   

 

0.05

 

 

 

   

 

201.92

 

 

   

 

7.50%

 

 

 

    

 

15.14%

 

 

 

EBITDA/BOE

 

    

 

$    18.54

 

 

 

   

 

$    19.52

 

 

 

   

 

$    21,47

 

 

 

   

 

$    19.52

 

 

 

   

 

125.00

 

 

   

 

15.00%

 

 

 

    

 

18.75%

 

 

 

LOE/BOE

 

    

 

$      9.69

 

 

 

   

 

$      9.23

 

 

 

   

 

$      8.31

 

 

 

   

 

$      7.89

 

 

 

   

 

250.00

 

 

   

 

15.00%

 

 

 

    

 

37.50%

 

 

 

Reserves Replacement

 

    

 

75.00

 

 

   

 

100.00

 

 

   

 

140.00

 

 

   

 

113.00

 

 

   

 

165.63

 

 

   

 

25.00%

 

 

 

    

 

41.41%

 

 

 

Production Target (BOEPD)

 

    

 

148,101

 

 

 

   

 

164,557

 

 

 

   

 

197,468

 

 

 

   

 

163,536

 

 

 

   

 

121.12

 

 

   

 

30.00%

 

 

 

    

 

36.34%

 

 

 

Total

 

                                                     

 

153.83%

 

 

 

The Committee exercised its negative discretion in adjusting annual cash payments under the AIP for NEOs for 2017 bonuses, which were payable in the first quarter of 2018. These downward adjustments included an across-the-board cut by 12% to 20% for all earned awards to the NEOs bringing NEO payouts to a level commensurate with those of other plan participants, even though the Company met or exceeded four of the six 2017 operational, safety and strategic performance goals. Mr. Eckart and Mr. Coleman received a small reduction than other NEOs based on the feedback of the CEO as to their performance during 2017. Actual payouts are set forth in the table below:

 

Named Executive Officer   

2017 Base

Salary

Earnings

    

Target Bonus as

a Percentage of

Base Salary

Earnings*

   Target
Bonus
Award
(Base Salary
Earnings
Multiplied
by Target
Bonus
Percentage)
     EarnedAward
(153.83% of

Target)
    

Negative

Discretion

Applied

    

Actual

Amount

Awarded

 

Roger W. Jenkins

 

    

 

$1,300,015

 

 

 

  

135%      

 

    

 

$1,755,020

 

 

 

    

 

$2,699,747

 

 

 

    

 

    20%  

 

 

 

    

 

$2,159,703

 

 

 

John W. Eckart

 

    

 

$   562,227

 

 

 

  

85%      

 

    

 

$   477,893

 

 

 

    

 

$   735,143

 

 

 

    

 

    12%  

 

 

 

    

 

$   646,905

 

 

 

Eugene T. Coleman

 

    

 

$   574,888

 

 

 

  

75%      

 

    

 

$   431,166

 

 

 

    

 

$   663,263

 

 

 

    

 

    12%  

 

 

 

    

 

$   583,652

 

 

 

Michael K. McFadyen*

 

    

 

$   461,334

 

 

 

  

75%      

 

    

 

$   346,001

 

 

 

    

 

$   532,253

 

 

 

    

 

    20%  

 

 

 

    

 

$   425,789

 

 

 

Walter K. Compton

 

    

 

$   555,884

 

 

 

  

65%      

 

    

 

$   361,325

 

 

 

    

 

$   555,825

 

 

 

    

 

    20%  

 

 

 

    

 

$   444,646

 

 

 

* Mr. McFadyen is paid in Canadian dollars. His base salary earnings for 2017 were C$579,930. His earned award was C$669,080. Negative discretion in the amount of 20% was applied. The actual amount awarded to Mr. McFadyen was C$535,246.

 

 

C. Long-term Incentive Compensation

The objectives of the Company’s long-term incentive program include:

 

1) to align executives’ interests with the interests of stockholders;

 

2) to reinforce the critical objective of building stockholder value over the long term;

 

3) to assist in the long-term attraction, motivation, and retention of an outstanding management team;

 

4) to complement the short-term performance metrics of 2017 Plan; and

 

5) to focus management attention upon the execution of the long-term business strategy of the Company.

Long-term incentive NEO compensation for 2017 included the grant of stock options, RSUs and PSUs under the Company’s 2012 LTI Plan. Stock options are designed to align the

interests of executives with the performance of the Company over the long term. The exercise or grant price of stock options equals the average of the high and the low of the Company’s common stock on the date of the grant. Stock options are inherently performance-based because option holders realize no economic benefit unless the Company’s stock price increases in value subsequent to the grant date. This aligns the optionees’ interests with that of stockholders. The vesting of PSUs is based upon the Company’s TSR relative to that of the TSR peer group (as described above).

On January 31, 2017, the Committee granted equity awards pursuant to the 2012 LTI Plan to each of the NEOs at that time. The value was split 54% in PSUs, 17% in stock options and 29% in RSUs on an expected value basis the 2017 award allocation was based upon the 50th percentile competitive market practice and the reduction of the number of stock options available to remain compliant under the 2012 LTI Plan. The Committee believes these awards are effective and appropriate methods of equity

 

 

 

 

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compensation. Stock options are particularly effective at aligning the interests of management and stockholders, but results can be skewed by movements in the stock market as a whole. Conversely, performance unit awards’ value is largely based on the Company’s performance relative to that of its peers, but does not necessarily equate with shareholder return.

The Company generally targets the median of competitive market pay levels for the annual grant value of long-term incentive compensation. When determining the size of the equity-based awards to the executives and the total number of shares available for equity-based award grants for all management employees for the fiscal year, the Committee considers survey data provided by the Committee’s compensation consultant, overall Company performance, internal equity, and individual performance, as well as the proportion of the total shares outstanding used for annual

equity-based award grants and the potential dilution to the Company’s stockholders. In 2017, due to continued low commodity prices, the Company made long-term incentive grants to the NEOs at a reduction from target, equating to approximately 70% of the value of each individual’s long-term incentive target guideline. To maintain parity with the other operational EVP, Mr. McFadyen’s 2017 long-term incentive grants equaled approximately 94% of his long-term incentive target guideline due to the exchange rate disparity between the U.S. and Canadian dollar. These guidelines, provided by Pay Governance from the Mercer Human Resource Consulting Energy 27 survey, were constructed around the 50th percentile competitive data. Total grants to all 2012 LTI Plan participants made in 2017 equaled approximately .87% of the Company’s outstanding shares which is below the 1% annual maximum grant allowed under the 2012 LTI Plan. NEO grants were as follows:

 

 

Named Executive Officer   

Number of

Stock Options

    

Number of

Time-Based

Restricted

Stock Units

    

 

Number of

Performance-

Based Restricted

Stock Units

 

Roger W. Jenkins

 

    

 

161,000

 

 

 

    

 

75,000

 

 

 

    

 

151,000

 

 

 

John W. Eckart

 

    

 

33,000

 

 

 

    

 

15,000

 

 

 

    

 

31,000

 

 

 

Eugene T. Coleman

 

    

 

42,000

 

 

 

    

 

20,000

 

 

 

    

 

39,000

 

 

 

Michael K. McFadyen

 

    

 

42,000

 

 

 

    

 

20,000

 

 

 

    

 

39,000

 

 

 

Walter K. Compton

 

    

 

31,000

 

 

 

    

 

15,000

 

 

 

    

 

29,000

 

 

 

 

The Company has never engaged in the process of backdating stock options and does not intend to do so in the future. The exercise price for all stock options is equal to the fair market value (average of daily high and low) on the date of the grant.

The Company’s stock option awards granted provide for payment of the aggregate exercise price to be automatically net settled in stock, which reduces dilution. Thus upon exercise, shares having an aggregate fair market value equal to both the exercise price and the amount of statutory minimum withholding taxes are withheld by the Company, and only net shares are delivered to the holder of the option. The Company’s stock options, all of which are non-qualified, vest in two equal installments on the second and third anniversaries of the grant date, and unless otherwise forfeited or exercised, expire seven years from the date of the grant.

RSUs awarded in January 2017 vest on the third anniversary of the grant date. Dividend equivalents are accumulated during the performance period and pay out only if the underlying units vest and are earned. Holders of RSUs do not have any voting rights.

PSUs awarded in 2017 will be eligible to vest in three years based on how the Company’s TSR compares to the TSR of an

index of the comparator group of energy companies (identified above). The 2017 performance unit awards contain four equally weighted measurement periods: year 1; year 2; year 3; and years 1-3 combined. Achievement of the 50th percentile TSR of the TSR peer group is required for vesting and payment of 100% of the target PSUs awarded, achievement of the 90th percentile TSR of the TSR peer group is required for vesting and payment of 150% of the target PSUs awarded, and achievement of the 25th percentile TSR of the TSR peer group is required for the vesting and payment of 50% of the target PSUs awarded. A prorated percentage of PSUs can vest and be paid for performance between the 25th and 90th TSR percentiles. No payment is made for achievement below the 25th percentile TSR of the TSR peer group. Dividend equivalents are accumulated during the performance period and pay out only to the extent that the underlying units vest and are earned. Holders of PSUs do not have any voting rights.

As noted above, the Committee currently uses three principal forms of long-term incentive compensation: stock options, time-based restricted stock units and PSUs. While the Committee expects to continue to use these same three principal forms of equity-based incentives going forward,

 

 

 

 

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LOGO

 

  

Compensation Discussion and Analysis (continued)    

 

 

 

it is possible that the Committee may adopt a different long-term incentive compensation strategy in future years in response to changes in the competitive marketplace, regulatory actions, and/or changes to business strategy. In order to provide for flexibility going forward, the 2012 LTI Plan provides possible alternative long-term equity incentive vehicles in addition to stock options and restricted stock units, including stock appreciation rights, performance shares, phantom units, dividend equivalents, and other stock-based incentives. The 2012 LTI Plan includes a list of other performance criteria that could be used for determination of performance-based awards.

During 2017, the Company granted 896,500 shares as Full Value Awards. As of December 31, 2017, the number of shares available for future grants of Full Value Awards under the 2012 LTI Plan was 1,494,372. As discussed under “Proposal 4 - Approval of the Proposed 2018 Long-Term Incentive Plan,” the Company seeks approval from stockholders of the 2018 LTIP in order to allow the Company to continue to align the long-term financial interests of its officers and other key employees with those of the Company’s stockholders, to attract and retain those individuals by providing compensation opportunities that are competitive with other companies and provide incentives to those individuals who contribute significantly to the long-term performance and growth of the Company.

D. Employee Benefits and Perquisites

The objectives of the Company’s employee benefits and perquisites program are:

 

1) to provide an employee benefit package with the same level of benefits provided to all Company employees which is competitive within the Company’s industry sector;

 

2) to offer executives indirect compensation which is efficient and supplemental to their direct compensation to assist with retirement, health, and welfare needs for individuals and their families; and

 

3) to provide only limited benefits to selected executives as deemed appropriate under the circumstances.

The Company’s executives are provided usual and customary employee benefits available to all employees. These include thrift savings (401(k)), life insurance, accidental death and dismemberment insurance, medical/dental insurance, vision insurance, long-term disability insurance, and a Company-sponsored pension plan. Effective with the spin-off of Murphy’s former U.S. retail marketing operation, Murphy USA Inc. (MUSA) on August 30, 2013, significant modifications were made to the U.S. defined benefit pension plan. Certain Company employees’ benefits under the U.S. plan were frozen at that time. No further benefit service will accrue for the affected employees; however, the plan will recognize future earnings after the spin-off. In addition, all previously unvested benefits became fully vested at the spin-off date. For those affected active employees of the Company, additional U.S. retirement plan benefits will accrue in future periods under a cash balance formula.

Tax regulations adversely affect certain highly compensated employees by restricting their full participation in qualified pension and defined contribution (thrift) plans. In an effort to provide the same level of retirement benefit opportunity for all employees, the Company maintains a Supplemental Executive Retirement Plan (the “SERP”). The purpose of the SERP is to restore pension plan and thrift plan benefits which are not payable under such plans because of certain specified benefit and compensation limitations under tax regulations. The benefit to the Company of this arrangement is the retention and long-term service of employees who are otherwise unprotected by employment contracts. The SERP is unfunded and is subject to general credit of the Company. Other than the SERP, the Company does not offer a deferred compensation alternative to the NEOs. The Committee also provides to Mr. Jenkins a maximum of 50 flight hours each year in the continental United States on Company aircraft as part of his total compensation package. Mr. Jenkins utilized 44.5 hours of the 50 approved hours with an aggregate incremental cost to the Company of $140,327, as reported in the 2017 Summary Compensation Table. The Standard Industry Fare Level rate was used to determine the income reportable to Mr. Jenkins for these trips, and the Company has not provided any tax gross-up or other tax assistance with respect to the income recognized for use of the Company aircraft.

 

 

 

 

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Compensation Discussion and Analysis (continued)    

 

 

 

LOGO

 

 

ACTIONS RELATED TO 2018 COMPENSATION

At its meeting on February 6, 2018, the Committee met to discuss executive compensation issues reflecting the Company’s 2017 performance results and executive pay matters for fiscal year 2018. The Committee reviewed and analyzed the Murphy executive compensation program as well as considered the past year’s performance and proper positioning of compensation opportunities for fiscal year 2018. Key decisions and actions related to 2018 executive compensation reached by the Committee include:

Modest Adjustments to Base Salaries

For fiscal year 2018, the Committee approved minimal adjustments to the base salaries for the NEOs effective as of February 1, 2018. Messrs. Jenkins, Coleman and McFadyen each received 2.5% adjustments, Mr. Compton received a 5.0% adjustment to bring his base salary closer to the midpoint of the Company’s peer group. Additionally, Mr. Eckart received a 10.0% adjustment effective as of January 1, 2018 due to the Company’s phased approach to bring his base salary closer to the midpoint of the Company’s peer group based on data provided by Pay Governance.

Exercise Negative Discretion with Respect to 2017 Annual Incentives

The Committee exercised its negative discretion in adjusting annual cash payments under the AIP for NEOs for 2017 bonuses, which were payable in the first quarter of 2018. These downward adjustments included an across-the-board cut by 12% to 20% for all earned awards to the NEOs bringing NEO payouts to a level commensurate with those of other plan participants, even though the Company met or exceeded four of the six 2017 operational, safety and strategic performance goals. In aggregate, the Company paid total bonus awards for all employees, including the NEOs and other AIP participants, equal to approximately $31,250,000.

Change in Performance Metrics with Respect to 2018 Annual Incentives

The Committee modified the metrics in the 2018 Annual Incentive performance metrics to increase the profile for the role of capital efficiency and financial discipline. The performance metrics and weightings for 2018 are shown below:

 

 

                2018 AIP Metrics and Weighting

 

     

 

Metric

   Weighting 

 

Total Recordable Incident Rate

       7.50%

 

Spill Rate

       7.50%

 

LOE/BOE

     20.00%

 

Reserves Replacement

     20.00%

 

Production Target (BOEPD)

     20.00%

 

EBITDA/Average Capital Employed

     25.00%

 

Total

   100.00%

Granted 2018 Long-Term Incentives at Target Levels

Based upon an analysis of competitive market data provided by Pay Governance, the recent grant practices of Murphy’s peer companies in the most recent market environment, and the performance of the Company’s top management during 2017, the Committee awarded long-term incentive grants equal to approximately 100% of the target award opportunities for each NEO based upon the 50th percentile competitive market practice. Long-term incentive grants for each NEO were awarded 75% in the value of PSUs and 25% in the value of RSUs. In light of a shift in the peer group compensation practices and due to provisions contained within the 2012 LTI Plan, the Committee ceased the inclusion of stock options as a part of the 2018 long-term incentive compensation mix. It is the judgment of the Committee that these long-term grants are fully competitive with current market competitive practices while serving as the proper alignment of management’s long-term interests with Murphy stockholder interests. This also represented a return to the Company’s target market positioning for long-term incentive awards after grants in the previous year were made below the 50th percentile based on the Committee’s view of appropriate grant levels at that time.

 

 

 

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Compensation Discussion and Analysis (continued)    

 

 

Target versus Realizable Compensation Chart—CEO Compensation

The “Target” bars represent Mr. Jenkins’ base salary, target AIP opportunity and the grant-date fair value of his long-term incentive awards for 2015, 2016 and 2017. The “Realizable” bars represent each year’s base salary paid, AIP earned and not paid until the following year, and the value of those long-term incentive awards as of December 31, 2017.

 

LOGO

 

 

 

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Compensation Discussion and Analysis (continued)  

 

 

 

LOGO

 

 

 

EXECUTIVE COMPENSATION COMMITTEE REPORT

The Executive Compensation Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis. Based on the review and discussions, the Executive Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Proxy Statement.

EXECUTIVE COMPENSATION COMMITTEE

Neal E. Schmale (Chair)

T. Jay Collins

Walentin Mirosh

Jeffrey W. Nolan

 

 

 

 

 

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LOGO

 

  

Executive Compensation

 

 

Tabular Information for Named Executive Officers

Further information with respect to the individuals who served as the Company’s Principal Executive Officer, Principal Financial Officer and the three other most highly compensated executive officers serving at the end of the last completed fiscal year is set forth in the following tables:

2017 SUMMARY COMPENSATION TABLE

 

  Name and Principal Position

 

 

Year

 

 

Salary

($)

 

 

Bonus

($)

 

 

Stock

Awards

($)(1)

 

 

Option

Awards

($)(2)

 

 

Non-Equity

Incentive

Plan

Compensation

($)(3)

 

 

 

Change in

Pension

Value and

Nonqualified
Deferred

Compensation

Earnings

($)

 

 

All Other

Compensation

($)(4)

 

 

Total

($)

 

 

Roger W. Jenkins

      2017         1,300,015             6,199,020         1,281,560         2,159,703         1,830,640   219,137   12,990,075

President and Chief
Executive Officer

      2016         1,300,013             2,410,310         1,106,600         1,950,000         1,501,179   233,645   8,501,747
      2015         1,300,000             7,192,723         2,413,400         1,237,714         1,742,060   197,720   14,083,617

John W. Eckart

      2017         562,227             1,261,320         262,680         646,905         950,295   34,543   3,717,970

Executive Vice
President and Chief
Financial Officer

      2016         515,011             442,990         206,230         486,000         547,018   31,800   2,229,049
      2015         506,333             1,323,437         449,770         289,922         52,062   31,280   2,652,804
                                 

Eugene T. Coleman(5)

      2017         574,888             1,619,005         334,320         583,652         597,614   35,303   3,744,782

Executive Vice
President

      2016         562,011             1,220,090         286,710         492,000         381,326   34,620   2,976,757
                                 

Michael K. McFadyen(5)(6)

      2017         461,334       100,000       1,619,005         334,320         425,789         546,530   28,766   3,515,744

Executive Vice
President

      2016         422,289       100,000       1,220,090         286,710         369,451         318,445   26,354   2,743,339
                                 

Walter K. Compton

      2017         555,884             1,207,530         246,760         444,646         897,450   34,163   3,386,433

Executive Vice President and
General Counsel

      2016         541,006             475,550         216,290         391,000         508,648   33,360   2,165,854
      2015         541,000             1,419,360         471,710         248,001         (25,556)     33,360   2,687,875
                                 
(1) The restricted stock unit awards are shown at grant date fair value as computed in accordance with FASB ASC Topic 718, excluding forfeiture estimates, as more fully described in Note J to the consolidated financial statements included in the 2017 Form 10-K report. Performance-based restricted stock unit awards are subject to performance-based conditions and are forfeited if the grantee’s employment terminates for any reason other than retirement, death or full disability. The performance-based restricted stock unit awards vest three years from the date of grant if performance conditions are met. Time-based restricted stock unit awards vest three years from the date of grant and are forfeited if the grantee’s employment terminates for any reason other than retirement, death or full disability. There is no assurance that the value realized by the executive will be at or near the value included herein.
(2) The stock option awards are shown at grant date fair value as computed in accordance with FASB ASC Topic 718, excluding forfeiture estimates, as more fully described in Note J to the consolidated financial statements included in the 2017 Form 10-K report. Options granted generally vest in two equal installments on the second and third anniversaries of the grant date. The options are exercisable for a period of seven years from the date of grant. The actual value, if any, an executive may realize will depend on the excess of the stock price over the exercise price on the date the option is exercised. There is no assurance that the value realized by the executive will be at or near the value included herein.
(3) Non-Equity Incentives were awarded and paid after the end of the year in which they are reported. Because these payments related to services rendered in the year prior to payment, the Company reported these incentives as a component of compensation expense in the year for which the award was earned.
(4) The total amounts shown in this column for 2017 consist of the following:
     Mr. Jenkins $78,000—Company contributions to defined contribution plans; $810—benefit attributable to Company-provided term life insurance policy;
     $140,327—Company airplane usage based on aggregate incremental cost to the Company. The aggregate incremental cost to the Company for airplane usage is calculated by multiplying, for each trip, the statutory miles for each trip times the 12-month average direct cost per statutory mile for the airplane used. The direct costs utilized in the calculation include: travel expenses for the aviation crew, communications expenses, landing fees, fuel and lubrication, contract maintenance and repairs, and the provision allocated for the overhaul of the engines.
     Mr. Eckart: $33,733—Company contributions to defined contribution plans; $810—Benefit attributable to Company-provided term life insurance policy.
     Mr. Coleman: $34,493—Company contributions to defined contribution plans; $810—Benefit attributable to Company-provided term life insurance policy.
     Mr. McFadyen: $27,680—Company contributions to defined contribution plans; $1,086—Benefit attributable to Company-provided term life insurance policy (Mr. McFadyen’s benefits are a Canadian Dollar benefit converted to US Dollar).
     Mr. Compton: $33,353—Company contributions to defined contribution plans; $810—Benefit attributable to Company-provided term life insurance policy.
(5) Mr. Coleman and Mr. McFadyen were not Named Executive Officers in 2015.
(6) The currency conversation factor for the Canadian dollar utilized in this table for Mr. McFadyen’s salary, non-equity incentive plan compensation is 0.7955 Canadian dollars to one U.S. dollar.

 

 

 

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Executive Compensation (continued)

 

 

 

LOGO

 

 

PAY RATIO

In accordance with the requirements of Section 953(b) of the Dodd-Frank Act and Item 402(u) of Regulation S-K (which we collectively refer to as the “Pay Ratio Rule”), we are providing the following estimated information for 2017:

 

  the median of the annual total compensation of all our employees (except our Chief Executive Officer) was $115,353;

 

  the annual total compensation of Chief Executive officer was $12,990,075; and

 

  the ratio of these two amounts was 113 to 1. We believe that this ratio is a reasonable estimate calculated in a manner consistent with the requirements of the Pay Ratio Rule.

SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various methodologies and apply various assumptions and, as result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies.

Methodology for Identifying Our “Median Employee”

Employee Population

To identify the median of the annual total compensation of all of our employees (other than our Chief Executive Officer), we first

identified our total employee population from which we determined our “median employee”. We determined that, as of December 31, 2017, our employee population consisted of approximately 1,252 individuals.

To identify our “median employee” from our total employee population, we compared the amount of total taxable earnings

reflected in each country’s payroll records, converted to US Dollars. We identified our “median employee” using this compensation measure, which was consistently applied to all our employees included in the calculation.

Our Median Employee

Determination of Annual Total Compensation of our “Median Employee” and our CEO

Once we identified our “median employee”, we then calculated such employee’s annual total compensation for 2017 using the same methodology we used for purposes of determining the annual total compensation of our NEOs for 2017 (as set forth in the above 2017 Summary Compensation Table).

Our CEO’s annual total compensation for 2017 for purposes of the Pay Ratio Rule is equal to the amount reported in the “Total” column in the 2017 Summary Compensation Table, adjusted, to the extent applicable, in a similar manner as the annual total compensation of our “median employee”.

 

 

 

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LOGO

 

  

Executive Compensation (continued)

 

 

2017 GRANTS OF PLAN-BASED AWARDS TABLE

 

  Name

 

       

 

Estimated Future Payouts Under

Non-Equity Incentive Plan Awards

         

 

Estimated Future Payouts Under

Equity Incentive Plan Awards

   

 

All Other

Stock
Awards:

Number of

Shares of

Stock or
Units

(#)

 

   

 

All Other

Stock
Awards:

Number of

Shares of

Stock or
Units

(#)

 

   

Exercise or

Base Price

of Option

Awards

($/Sh)(1)

 

   

Closing

Price on

Grant Date

($/Sh)

 

   

Grant Date 

Fair Value 

of Stock 

and Option 

Awards 

($)(2) 

 

 

Grant Date

 

   

Threshold

($)

 

   

Target

($)

 

   

Maximum

($)

 

         

Threshold

(#)

 

   

Target

(#)

 

   

Maximum

(#)

 

           

 

Roger W.

      1,096,888       1,755,020       4,000,000                                                

— 

Jenkins     1/31/2017                           75,500       151,000       226,500                            

4,061,145 

    1/31/2017                                             75,000                      

2,137,875 

     

 

1/31/2017

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

           

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

161,000

 

 

 

   

 

28.505

 

 

 

   

 

28.910

 

 

 

 

1,281,560 

 

 

John W.

      298,683       477,893       1,194,733                                                

— 

Eckart     1/31/2017                           15,500       31,000       46,500                            

833,745 

    1/31/2017                                             15,000                      

427,575 

     

 

1/31/2017

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

           

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

33,000

 

 

 

   

 

28.505

 

 

 

   

 

28.910

 

 

 

 

262,680 

 

 

Eugene T.

      269,479       431,166       1,077,915                                                

— 

Coleman     1/31/2017                           19,500       39,000       58,500                            

1,048,905 

    1/31/2017                                             20,000                      

570,100 

     

 

1/31/2017

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

           

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

42,000

 

 

 

   

 

28.505

 

 

 

   

 

28.910

 

 

 

 

334,320 

 

 

Michael K.

      216,251       346,001       865,003                                                

— 

McFadyen     1/31/2017                           19,500       39,000       58,500                            

1,048,905 

    1/31/2017                                             20,000                      

570,100 

     

 

1/31/2017

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

           

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

42,000

 

 

 

   

 

28.505

 

 

 

   

 

28.910

 

 

 

 

334,320 

 

 

Walter K.

      225,828       361,324       903,310                                                

— 

Compton     1/31/2017                           14,500       29,000       43,500                            

779,955 

    1/31/2017                                             15,000                      

427,575 

     

 

1/31/2017

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

           

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

31,000

 

 

 

   

 

28.505

 

 

 

   

 

28.910

 

 

 

 

246,760 

 

(1) The exercise price of options is determined using the average of the high and low of the stock price on the date of grant.
(2) The grant date fair value of the Company’s performance-based restricted stock units is determined using a Monte-Carlo valuation model, as further described in Note J to the consolidated financial statements included in the Form 10-K report.
 

 

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Executive Compensation (continued)

 

 

 

LOGO

 

 

2017 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE

 

     

 

Option Awards

  Name

 

  

 

Number of Securities
Underlying Unexercised
Exercisable Options
(#)(1)

 

  

 

Number of Securities
Underlying Unexercised
Unexercisable Options

(#)(1)

 

    

Option
Exercise Price
($)

 

    

Option 

Expiration 

Date 

 

 

Roger W. Jenkins

   71,955         58.8392      2/1/2018
   71,955         51.6305      1/31/2019
   55,350         39.0244      6/20/2019
   129,519         54.2141      2/5/2020
   96,785         62.9765      8/7/2020
   120,000         55.8200      2/4/2021
   110,000      110,000        49.6500      2/3/2022
        220,000        17.5650      2/2/2023
           

 

161,000

 

 

 

    

 

28.5050

 

 

 

  

1/31/2024

 

 

John W. Eckart

   30,443         58.8392      2/1/2018
   38,745         51.6305      1/31/2019
   43,394         54.2141      2/5/2020
   15,000         55.8200      2/4/2021
   20,500      20,500        49.6500      2/3/2022
        41,000        17.5650      2/2/2023
       

 

33,000

 

 

 

    

 

28.5050

 

 

 

  

1/31/2024

 

 

Eugene T. Coleman

   38,745               58.8392      2/1/2018
   44,280         51.6305      1/31/2019
   62,546         54.2141      2/5/2020
   25,000         55.8200      2/4/2021
   28,500      28,500        49.6500      2/3/2022
        57,000        17.5650      2/2/2023
       

 

42,000

 

 

 

    

 

28.5050

 

 

 

  

1/31/2024

 

 

Michael K. McFadyen

   27,675               58.8392      2/1/2018
   44,280         51.6305      1/31/2019
   62,546         54.2141      2/5/2020
   23,000         55.8200      2/4/2021
   25,000